Comments on: What's a good bank without lots of CDO/ABCP/etc exposure?

Question: What's a good bank without lots of CDO/ABCP/etc exposure?

paul_smatatoes — Tue, 27 Nov 2007 17:56:19 -0800

Which major American bank is least-sketchy right now? I'm thinking about switching and I don't want to reward bad management. If it helps, someone with good presence in the greater NYC area would be best. By "least sketchy", I guess I mean "having the least to do with the M-LEC and/or CDOs, ABCP, etc.", so no Chase, Bank of America, or Citibank. I'm open to online banks, I guess, if the deal is good.

By: pullayup

pullayup — Tue, 27 Nov 2007 18:05:49 -0800

I am very, very happy with my credit union, though if you want the latest super-everything online banking experience you may be disappointed.

By: iamabot

iamabot — Tue, 27 Nov 2007 18:08:54 -0800

Do a search for this, it pops up every other month. Credit unions generally have a strong following. ING, HSBC are popular. If you are eligible USAA is the best.

By: Gordion Knott

Gordion Knott — Tue, 27 Nov 2007 18:12:04 -0800

Well, if you're open to online banks, I guess the cut-to-the-chase advice is to go with a reputable outfit like Schwab (which is a broker, but provides banking services), and avoid E*trade (also a broker with a banking arm).

But you should look over the financials of the online institution, and maybe check its stock price.

By: hoppytoad

hoppytoad — Tue, 27 Nov 2007 18:14:04 -0800

Maybe this NY credit union search will help.

By: Kwantsar

Kwantsar — Tue, 27 Nov 2007 18:22:41 -0800

Commerce Bank, which is soon to be tied up with TD (a typically near-bulletproof Canadian bank), has a strong deposit franchise and a Tier I ratio in excess of 11%.

By: phaedon

phaedon — Tue, 27 Nov 2007 18:39:50 -0800

What exactly is sketchy about Bank of America?

By: mkb

mkb — Tue, 27 Nov 2007 18:41:37 -0800

phaedon: in the linked Wikipedia article, Bank of America is named as a party to MLEC.

By: zennoshinjou

zennoshinjou — Tue, 27 Nov 2007 18:41:41 -0800

Im a big fan of ING. Their customer service is fast, accurate and friendly and the interest rate on checking and savings accounts are great (4+% on both).

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Tue, 27 Nov 2007 18:58:16 -0800

ING and HSBC have both acted as arrangers for CDOs. I think HSBC recently took a multi-billion charge relating to their mortgage business, in fact.

I doubt you're going to find any big players without some involvement, and even your local credit union probably sold their mortgages to a clearinghouse to be packaged into a CDO, and quite possibly made subprime loans to people with bad credit knowing full well they would sell them on and not have to bear the risk of any blowing up.

Anyway, I wouldn't view CDOs as poison. They were, and are, a great idea that did a lot to reduce the risk (and thus cost) of making home loans. Yeah, there were some kinks in the pricing models and people got greedy, but that's true of anything.

The bad behavior in the market was toxic, too, so the losses don't necessarily correspond to the bad behavior. Like I said earlier, the actual subprime lenders in many cases have long since washed their hands of the bad loans (and cashed their checks for them). It's the buyers or institutions holding worthless CDOs as collateral who have gotten burned. An institution invested in an impeccably managed CDO business still would've lost a lot of money.

The best advice is probably to look at overall financial health of a bank rather than trying to second guess a particular business practice.

By: shownomercy

shownomercy — Tue, 27 Nov 2007 19:06:45 -0800

Well, I'm very happy with WAMU (nyc area), but I have no idea about their management.

No hidden fees or "upgraded" fee structures like BoA or citizens, pretty high % for savings, decent online banking.

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Tue, 27 Nov 2007 19:15:46 -0800

I'm actually happy with WaMu too, but they've taken CDO-related charges.

By: burnmp3s

burnmp3s — Tue, 27 Nov 2007 19:45:32 -0800

No offense, but choosing a bank based on some notion of economic activism is a fairly empty gesture. Unless you are part of the 1% of people who have an obscene amount of money, the bank only wants to have you as a customer so that they can make money off of every check that you bounce. Denying a bank the privilege of holding onto your money is about as effective as boycotting the US Postal system.

If you really want to make an economic statement, you might want to consider becoming a part of projects like Kiva.org or MicroPlace, which have the stated purpose of stimulating the economies of developing countries.

If you just want to make money, then just look for who will give you the best deal. BankDeals has a good weekly roundup of the best online savings accounts. If you're afraid that a bank will go under and you'll lose all your money, don't be. Anything remotely resembling a bank has FDIC insurance, which is guaranteed by the US government for amounts less than $100,000. When NetBank went under earlier this year, all FDIC insured funds were transfered to ING quickly enough that customers didn't even see any down time.

By: Frank Grimes

Frank Grimes — Tue, 27 Nov 2007 20:27:15 -0800

Nearly every bank has exposure to this stuff, Canadian banks included. Money market accounts are probably going to have exposure to ABCP.

By: alms

alms — Tue, 27 Nov 2007 20:35:23 -0800

Fidelity has been getting positive press about their high interest checking accounts. I know someone who has one and is very pleased with it.

I've used Fidelity's brokerage services for many years and I've always been pleased with their customer service and online tools.

By: JaredSeth

JaredSeth — Tue, 27 Nov 2007 20:41:44 -0800

I've been banking with Commerce Bank since the mid 80s (they had about 5 branches at the time). Open late! Sunday hours! Need I say more?

By: Black_Umbrella

Black_Umbrella — Wed, 28 Nov 2007 06:15:00 -0800

If you are current or retired military / married to someone who is or child of someone who was, check out USAA

They are not a brick and mortar bank, but believe me in saying they are an amazing bank. Besides savings and credit, they offer investment services, insurance, etc.

By: bedhead

bedhead — Wed, 28 Nov 2007 08:52:46 -0800

Commerce is pretty awesome. I'm sure that what several people upthread said is true - that you probably can't completely avoid exposure to the above while using any sort of bank - but as far as I can tell, Commerce is the least asshole-ish bank out there. Plus, they have the best hours of any bank in the city.

By: yarrow

yarrow — Wed, 28 Nov 2007 14:32:19 -0800

Commerce's CEO, still a major stockholder, left in some kind of management scandal this summer.

I think Wells Fargo is sometimes mentioned as being relatively uninvolved with the sketchier ramifications of the mortgage mess, though they're still planning a giant writeoff.

I agree with others that there's probably very little correlation between sketchy as regards a bank's role in exotic mortgage instruments and sketchy as regards a bank's treatment of its customers and safety of its deposits.