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FDIC Closes Netbank, One of the First Online Banks

Zonk posted about 7 years ago | from the thanks-loan-guys dept.

Businesses 174

An anonymous reader writes "NetBank, one of the first internet banks in the country was closed by the FDIC on Friday. Being a loyal customer for 8 years, I am saddened that an institution that provided me with so much great service and a cool, hi tech way to conduct my financial transactions is shutting down. Seems that mortgage defaults are to blame: 'NetBank's closure marks the first bank to close since the recent U.S. housing boom deflated. Critics have said that weak underwriting standards have led to record number of homeowners entering the foreclosure process. But NetBank's rare Internet-based business strategy made it a unique financial institution and its problems aren't expected to mirror issues facing other mortgage lenders, analysts say.'"

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Interesting change to their users guide (-1, Troll)

Anonymous Coward | about 7 years ago | (#20792467)

NIGGER OWNERS MANUAL

Congratulations on your purchase of a brand new nigger! If handled properly, your apeman will give years of valuable, if reluctant, service.

INSTALLING YOUR NIGGER.
You should install your nigger differently according to whether you have purchased the field or house model. Field niggers work best in a serial configuration, i.e. chained together. Chain your nigger to another nigger immediately after unpacking it, and don't even think about taking that chain off, ever. Many niggers start singing as soon as you put a chain on them. This habit can usually be thrashed out of them if nipped in the bud. House niggers work best as standalone units, but should be hobbled or hamstrung to prevent attempts at escape. At this stage, your nigger can also be given a name. Most owners use the same names over and over, since niggers become confused by too much data. Rufus, Rastus, Remus, Toby, Carslisle, Carlton, Hey-You!-Yes-you!, Yeller, Blackstar, and Sambo are all effective names for your new buck nigger. If your nigger is a ho, it should be called Latrelle, L'Tanya, or Jemima. Some owners call their nigger hoes Latrine for a joke. Pearl, Blossom, and Ivory are also righteous names for nigger hoes. These names go straight over your nigger's head, by the way.

CONFIGURING YOUR NIGGER
Owing to a design error, your nigger comes equipped with a tongue and vocal chords. Most niggers can master only a few basic human phrases with this apparatus - "muh dick" being the most popular. However, others make barking, yelping, yapping noises and appear to be in some pain, so you should probably call a vet and have him remove your nigger's tongue. Once de-tongued your nigger will be a lot happier - at least, you won't hear it complaining anywhere near as much. Niggers have nothing interesting to say, anyway. Many owners also castrate their niggers for health reasons (yours, mine, and that of women, not the nigger's). This is strongly recommended, and frankly, it's a mystery why this is not done on the boat

HOUSING YOUR NIGGER.
Your nigger can be accommodated in cages with stout iron bars. Make sure, however, that the bars are wide enough to push pieces of nigger food through. The rule of thumb is, four niggers per square yard of cage. So a fifteen foot by thirty foot nigger cage can accommodate two hundred niggers. You can site a nigger cage anywhere, even on soft ground. Don't worry about your nigger fashioning makeshift shovels out of odd pieces of wood and digging an escape tunnel under the bars of the cage. Niggers never invented the shovel before and they're not about to now. In any case, your nigger is certainly too lazy to attempt escape. As long as the free food holds out, your nigger is living better than it did in Africa, so it will stay put. Buck niggers and hoe niggers can be safely accommodated in the same cage, as bucks never attempt sex with black hoes.

FEEDING YOUR NIGGER.
Your Nigger likes fried chicken, corn bread, and watermelon. You should therefore give it none of these things because its lazy ass almost certainly doesn't deserve it. Instead, feed it on porridge with salt, and creek water. Your nigger will supplement its diet with whatever it finds in the fields, other niggers, etc. Experienced nigger owners sometimes push watermelon slices through the bars of the nigger cage at the end of the day as a treat, but only if all niggers have worked well and nothing has been stolen that day. Mike of the Old Ranch Plantation reports that this last one is a killer, since all niggers steal something almost every single day of their lives. He reports he doesn't have to spend much on free watermelon for his niggers as a result. You should never allow your nigger meal breaks while at work, since if it stops work for more than ten minutes it will need to be retrained. You would be surprised how long it takes to teach a nigger to pick cotton. You really would. Coffee beans? Don't ask. You have no idea.

MAKING YOUR NIGGER WORK.
Niggers are very, very averse to work of any kind. The nigger's most prominent anatomical feature, after all, its oversized buttocks, which have evolved to make it more comfortable for your nigger to sit around all day doing nothing for its entire life. Niggers are often good runners, too, to enable them to sprint quickly in the opposite direction if they see work heading their way. The solution to this is to *dupe* your nigger into working. After installation, encourage it towards the cotton field with blows of a wooden club, fence post, baseball bat, etc., and then tell it that all that cotton belongs to a white man, who won't be back until tomorrow. Your nigger will then frantically compete with the other field niggers to steal as much of that cotton as it can before the white man returns. At the end of the day, return your nigger to its cage and laugh at its stupidity, then repeat the same trick every day indefinitely. Your nigger comes equipped with the standard nigger IQ of 75 and a memory to match, so it will forget this trick overnight. Niggers can start work at around 5am. You should then return to bed and come back at around 10am. Your niggers can then work through until around 10pm or whenever the light fades.

ENTERTAINING YOUR NIGGER.
Your nigger enjoys play, like most animals, so you should play with it regularly. A happy smiling nigger works best. Games niggers enjoy include: 1) A good thrashing: every few days, take your nigger's pants down, hang it up by its heels, and have some of your other niggers thrash it with a club or whip. Your nigger will signal its intense enjoyment by shrieking and sobbing. 2) Lynch the nigger: niggers are cheap and there are millions more where yours came from. So every now and then, push the boat out a bit and lynch a nigger.

Lynchings are best done with a rope over the branch of a tree, and niggers just love to be lynched. It makes them feel special. Make your other niggers watch. They'll be so grateful, they'll work harder for a day or two (and then you can lynch another one). 3) Nigger dragging: Tie your nigger by one wrist to the tow bar on the back of suitable vehicle, then drive away at approximately 50mph. Your nigger's shrieks of enjoyment will be heard for miles. It will shriek until it falls apart. To prolong the fun for the nigger, do *NOT* drag him by his feet, as his head comes off too soon. This is painless for the nigger, but spoils the fun. Always wear a seatbelt and never exceed the speed limit. 4) Playing on the PNL: a variation on (2), except you can lynch your nigger out in the fields, thus saving work time. Niggers enjoy this game best if the PNL is operated by a man in a tall white hood. 5) Hunt the nigger: a variation of Hunt the Slipper, but played outdoors, with Dobermans. WARNING: do not let your Dobermans bite a nigger, as they are highly toxic.

DISPOSAL OF DEAD NIGGERS.
Niggers die on average at around 40, which some might say is 40 years too late, but there you go. Most people prefer their niggers dead, in fact. When yours dies, report the license number of the car that did the drive-by shooting of your nigger. The police will collect the nigger and dispose of it for you.

COMMON PROBLEMS WITH NIGGERS - MY NIGGER IS VERY AGGRESIVE
Have it put down, for god's sake. Who needs an uppity nigger? What are we, short of niggers or something?

MY NIGGER KEEPS RAPING WHITE WOMEN
They all do this. Shorten your nigger's chain so it can't reach any white women, and arm heavily any white women who might go near it.

WILL MY NIGGER ATTACK ME?
Not unless it outnumbers you 20 to 1, and even then, it's not likely. If niggers successfully overthrew their owners, they'd have to sort out their own food. This is probably why nigger uprisings were nonexistent (until some fool gave them rights).

MY NIGGER bitches ABOUT ITS "RIGHTS" AND "RACISM".
Yeah, well, it would. Tell it to shut the fuck up.

MY NIGGER'S HIDE IS A FUNNY COLOR. - WHAT IS THE CORRECT SHADE FOR A NIGGER?
A nigger's skin is actually more or less transparent. That brown color you can see is the shit your nigger is full of. This is why some models of nigger are sold as "The Shitskin".

MY NIGGER ACTS LIKE A NIGGER, BUT IS WHITE.
What you have there is a "wigger". Rough crowd. WOW!

IS THAT LIKE AN ALBINO? ARE THEY RARE?
They're as common as dog shit and about as valuable. In fact, one of them was President between 1992 and 2000. Put your wigger in a cage with a few hundred genuine niggers and you'll soon find it stops acting like a nigger. However, leave it in the cage and let the niggers dispose of it. The best thing for any wigger is a dose of TNB.

MY NIGGER SMELLS REALLY BAD
And you were expecting what?

SHOULD I STORE MY DEAD NIGGER?
When you came in here, did you see a sign that said "Dead nigger storage"? .That's because there ain't no goddamn sign.

Goes to show that... (0)

Anonymous Coward | about 7 years ago | (#20792473)

user experience isn't the most important aspect of all things. Also, is Slashdot having hiccups?

Whats up with the 503s? (0)

Anonymous Coward | about 7 years ago | (#20792577)

Heh, what's up with all the 503s? /. server crash or something?

Re:Whats up with the 503s? (0)

Anonymous Coward | about 7 years ago | (#20792607)

/. is falling victim to the notorious "Digg" effect.

yay (-1, Offtopic)

Anonymous Coward | about 7 years ago | (#20792475)

frist psot!

OTS not FDIC (5, Informative)

eipgam (945201) | about 7 years ago | (#20792487)

It is the Office of Thrift Supervision that has closed NetBank, not FDIC: http://www.ots.treas.gov/docs/7/777071.html [treas.gov]

That's irrelevant. (0)

Anonymous Coward | about 7 years ago | (#20792697)

What does matter is that we're seeing American financial institutions start to fail, due to the poor health of the American economy.

Six years of productivity wasted on war, plus shady lending practices, plus illegal immigration, and the rise of the manufacturing sector in the third-world has put the American economy on shaky ground.

The Fed has likely resorted to hyperinflation to try to exert control over this failing economy.

The American dollar has decreased in value so quickly that it's at par with the Canadian dollar.

Now we have the oil-producing nations considering switching to the Euro for their transactions, rather than the dollar.

The American economy isn't in good shape at all. And this is probably just the beginning of more troubles.

Re:That's irrelevant. (2, Insightful)

DavidTC (10147) | about 7 years ago | (#20793471)

It's not really the poor economy, it's the fact Bush has used a bubble [firedoglake.com] instead of actual growth.

We should have had a minor recession in 2001 or 2002, but then it would have been really hard to convince people they needed to funnel huge amounts of money into defense contractors pockets.

Money quote:

The liberal solution would have been to try and find a new tech boom, which in the case of the Gore administration would almost certainly have either been a micro and alternative energy boom or a telecom boom.

The Bush solution was different. The decision was made to base the economy on the real estate market. Record low interest rates flooded money into the mortgage market and the housing market boomed.

A boom sucks, at the end, No matter what you do, people will come in and lose their shirts. But some booms, in the long run, have much better results. The internet boom of the 90s changed the face of the planet. And even if some people lost their shirts in the stock market, well, no one made them invest.

This housing boom, OTOH, everyone did have to play. Even renters pay more when houses prices are up, although at least they won't have to watch the value of their house plummet. And it's left us with no tangible benefits at all except millions of shoddy McMansions.

We could have put that same amount of effort and money in alternate energy, and be in the middle of a nice stock correction now, where alternate energy company stocks are dropping through the floor and being picked up by a few big players which are merging with the big energy suppliers who are just now realizing they need to change their business plan. Which wouldn't hurt John Q. Public at all. John Q. Public, in fact, came out ahead because he got 'sponsored' for solar panels and that company, with a crappy business plan, went out of business, like during the tech crash.

Re:That's irrelevant. (3, Informative)

DavidShor (928926) | about 7 years ago | (#20794925)

"It's not really the poor economy, it's the fact Bush has used a bubble instead of actual growth."

What exactly did the Bush administration do wrong, as far as economic management goes? No matter who was in power, after 9/11 any politician would have drastically increased homeland security and military spending. The Bush Tax cuts were very popular, and would have been implemented anyway, whether or not Bush was in power. Not only that, but while corruption is very photogenic, it's effects have been economically negligible. Our deficit is mostly the result of highly enlarged entitlement spending, which I just can't see tied to George Bush.

You seem to think that presidents are relevant to macroeconomic trends. This is a common political delusion, but in the absence of massively stupid legislation(On the level of what has been seen in Latin America), the Federal Reserve bank is the only office with any real power.

"This housing boom, OTOH, everyone did have to play. Even renters pay more when houses prices are up, although at least they won't have to watch the value of their house plummet. And it's left us with no tangible benefits at all except millions of shoddy McMansions."

Of course, all that we are left with are millions of homes. What use could they serve?

"We could have put that same amount of effort and money in alternate energy, and be in the middle of a nice stock correction now, where alternate energy company stocks are dropping through the floor and being picked up by a few big players which are merging with the big energy suppliers who are just now realizing they need to change their business plan. Which wouldn't hurt John Q. Public at all. John Q. Public, in fact, came out ahead because he got 'sponsored' for solar panels and that company, with a crappy business plan, went out of business, like during the tech crash."

Really? How exactly could we have done that?

Dollar falling fast. (0)

Anonymous Coward | about 7 years ago | (#20793537)

MOD PARENT UP. Dollar falling fast, as the oil-producing companies switch to selling oil in Euros. The U.S. government and U.S. companies like AT&T [slashdot.org] adopting the aspects of dictatorship rather than those of democracy.

Soon everything you buy will go up in price very fast, as old inventories are exhausted. That's because almost everything sold in the U.S. is made in China, and because the dollar is hyper-inflating (losing value rapidly against other currencies).

Impeach the Decider. He and Darth Cheney engineered this destruction. They are oil and weapons investors who want to invade Iran because Iran is selling its oil for euros, and because more war will benefit the investments of their families and friends.

Republicans were never "conservative". They just picked that word because it tested well in studies of U.S. voters. The Decider is just a fake leader who is in fact controlled by others. He certainly isn't religious, he pretends to be religious only because that tested well with the voters.

Re:That's irrelevant. (1)

khallow (566160) | about 7 years ago | (#20793939)

One data point doesn't make a trend. If you're right, there'll be more where that came from.

Re:That's irrelevant. (1)

DavidShor (928926) | about 7 years ago | (#20794997)

"What does matter is that we're seeing American financial institutions start to fail, due to the poor health of the American economy."

Really? Inflation is low, Unemployment is low, GDP growth is ok. I don't really see how you can define "poor health".

"plus illegal immigration, and the rise of the manufacturing sector in the third-world has put the American economy on shaky ground."

How has the presence of massively cheaper goods and labor made us worse off?

"The Fed has likely resorted to hyperinflation to try to exert control over this failing economy."

Hyperinflation? No, Zimbabwe has hyper-inflation. The US has lower inflation rates then most of developed world.

"The American dollar has decreased in value so quickly that it's at par with the Canadian dollar."

I hate it when people try and moralize an exchange rate. The decrease in the dollar's value will hurt some people, and be beneficial to others.

"Now we have the oil-producing nations considering switching to the Euro for their transactions, rather than the dollar."

I hear this nightmare scenario all the time, and I don't see the problem with it. The US will lose a couple billion dollars in seniorage revenue, and it will be somewhat harder to finance debt. I actually see this as a positive move.

NetBank did not have the best interest rates. (2, Informative)

Futurepower(R) (558542) | about 7 years ago | (#20793379)

Not only is the Slashdot story wrong in that way, it is misleading in another way: "I am saddened that an institution that provided me with so much great service..." NetBank did not, however, have the best interest rates.

GMAC Bank [gmacbank.com] and HSBC Direct [hsbcdirect.com] had higher rates than NetBank.

BankRate.com [bankrate.com] is the site I used to find those two. BankRate.com is a poor quality resource for finding banks, in my opinion, but it is better than nothing. Does anyone know of a better site for shopping banks?

Re:NetBank did not have the best interest rates. (2, Informative)

Nimey (114278) | about 7 years ago | (#20793755)

Do you mean lower rates? I used to work at a "loan servicer" (and collections agency) and NetBank was one of our clients, at least for their car loans.

Their target market, at the time (2005), was for people with good credit, say FICO 760 and better (don't remember the exact numbers). I seem to recall their interest rates were fairly low, at least compared to the other companies we serviced loans for.

Re:OTS not FDIC (1)

fm6 (162816) | about 7 years ago | (#20794717)

To those who are wondering, "what happened to the FDIC?": The FDIC supervises regular banks. NetBank was a "thrift" a weird institution that appeared when the Reagan administration deregulated banking, allowing depositor-owned savings and loan associations [britannica.com] to convert to a sort of commercial bank that specializes in mortgages. Thrifts have a long history of getting in over their heads [fdic.gov] , and creating real estate "booms" that price most people out of the home market. But a lot of folks got rich off them, so I guess that's OK.

Fridays are going to become interesting (2, Interesting)

talledega500 (994228) | about 7 years ago | (#20792493)

The US news services, the govt and the market collude to deliver bad news on fridays
when we citizens faithfully spend our evening at the pub and dont read the news.

I bet if you really wanted to find out whats really going on in the markets you
could simply aggregate all of the Friday financial news.

Will anyone be talking about netbank on Monday. Unlikely.
But here's the creep.

2.5 billion dollars is a small bank but not a community bank.
If you had money to bet on it given how scared the bond market is over this,
do you think theres a bank with oh say 100 billion thats going to fail
in say the next year or so.

You can bet your bottom dollar on it. Oh wait you already did.
You shouldve kept it under the mattress.

Re:Fridays are going to become interesting (3, Informative)

Planesdragon (210349) | about 7 years ago | (#20792651)

You can bet your bottom dollar on it. Oh wait you already did.
You shouldve kept it under the mattress.
No. If my credit union or bank closed tomorrow, I could withdraw all of my funds, up to the bank's insured amount -- which is more than I or most other Americans make in a year.

Now, if I had instead invested my money and bought shares of the bank, then I'd be up shit creek without a paddle. But that's why stocks pay more -- because they're riskier, and so they have to or no one would buy them.

You don't think the value of money changes? (1)

Colin Smith (2679) | about 7 years ago | (#20793323)

But that's why stocks pay more -- because they're riskier, and so they have to or no one would buy them.

Really. You don't think money is as risky or riskier than say FTSE all-share fund or whatever the US equivalent is.
 

Re:Fridays are going to become interesting (0)

Anonymous Coward | about 7 years ago | (#20793363)

You're fooling yourself. The US government is trillions of dollars in debt - social security is funded from current receipts contrary to law or original intent - and you think that the FDIC program is fully funded and secure? The only guarantee that you have is that congress will have to go to the fed to borrow more money to pay back your failed bank, and then inflation will be so high and the dollar so devalued that whatever cash you get is only going to impoverage the rest of the country further and your effective net worth in terms of purchasing power will remain unchanged. That's the best case, because the rest of the world will not put up with those shenanigans for long, especially if the current political climate remains unchanged (PNAC, et al). If your failed bank is one within the fed system, maybe then Americans will start to clue in to the reality already enshrined in the Constitution regarding what constitutes money but until that time it's all smoke and mirrors, and where there's smoke ...

Re:Fridays are going to become interesting (1)

DavidShor (928926) | about 7 years ago | (#20795025)

You gold-bugs severely overestimate the impact of printing money. If a major bank collapsed, the FDIC would only need to insure around a 30 billion, since the majority of funds are kept above $100,000.

The inflationary effects of such an injection, while they exist, would most likely be far under one percent.

Re:Fridays are going to become interesting (1)

DerekLyons (302214) | about 7 years ago | (#20793615)

Tinfoil hat while under the influence of mind altering substances much?

Re:Fridays are going to become interesting (0)

Anonymous Coward | about 7 years ago | (#20793923)

Ad hominem rebuttals do not help your position. Maybe you should have paid more attention in high school?

Re:Fridays are going to become interesting (0)

Anonymous Coward | about 7 years ago | (#20793879)

Ehh, there is a reason why FDIC steps in on a Friday afternoon - to minimize disruption to customers.

Friday afternoon NetBank was "unplugged". Friday night account access was back in read-only mode while everything is transitioned to the new owner (ING Direct). They expect everything to be back and running on Sunday. In the meantime, there is no distruption to ATM or check access (although you can't really do much with checks on a weekend anyway).

This is Slashdot - would do you do software migrations on Monday morning or on a weekend when your business is closed?

NetBank has been dead as far as its stock is concerned for quite some time, so this isn't really news.

For the record, I have a NetBank checking account and has not moved a finger even though I knew this was coming ever since EverBank acquisition fell through weeks ago. Why do I care? My money is safe up to $100k FDIC limit. In fact, they will now do all the work for me to switch to a better account at ING.

Mattress?! Do you even know what FDIC insurance does?

S&L crisis + DOT COM = housing bubble (4, Insightful)

Anonymous Coward | about 7 years ago | (#20792501)

Yep, It's a bubble and some people are going lose their shirts.

"It's a great time to buy a house."

"You'll never lose money in real estate".

"Real Estate is a great investment".

"Sone else is bidding on the property".

Bottom line is with stagnant median income, people just can't afford a house. The real estate sector, after an unprecidented run up, is undergoing correction and it will be long and will take some people under. If you're renting or can afford your mortgage, you'll do okay. Every else might as well mail in the keys. If the debt is to netbank, send the jingle mail to ING direct instead. This is the downside of mass immigration and easy money, people. Time to buck up!

Re:S&L crisis + DOT COM = housing bubble (1)

CheekyBastard (1142171) | about 7 years ago | (#20794689)

The current real estate market problems have nothing to do with stagnant median income. The prices of homes in many areas unrealistically increased; coupled with people taking out loans far above what they should due to loan products such as ARMs, which make it look like an expensive house is more affordable than it really is.

So if people can't afford a house right now, median income is not to blame. In fact, if median income had not increased then this would still be a good time to purchase a house. With the significant price corrections in many markets and reasonable interest rates, this is a perfect time to purchase a first or additional home.

Also, what the hell does 'mass immigration' have to do with this?

Wait, what? (2, Funny)

Anonymous Coward | about 7 years ago | (#20792517)

Banks are being closed in the US? Good grief. Here we are worrying about Northern Rock having a bit of a wobble and the US is closing banks!

Nice work on decimating your economy!

Re:Wait, what? (1)

talledega500 (994228) | about 7 years ago | (#20792537)

What do you think mortgage lenders are? Banks.
Or "retail shops" for banks. Same diff.

Over 80 of em have gone down in the US in about a year.

But this is the US. What me worry?
We have all the economic statistics cooked to make sure
that NOONE will see it coming, until after its all over.
And it wont matter hell we have been eating shitty fast food for years,
a few more years wont matter much.

At least the Northern Rock depositors had the good sense to cut and run.
In the US it will probably be more like we dont cut and run and end up
holding our fake worthless money until the bitter end.

Wont that be fun?

Re:Wait, what? (1)

skeptictank (841287) | about 7 years ago | (#20793435)

"Nice work on decimating your economy!"

Thanks! We are trying.

In for a Penny... (1)

pipingguy (566974) | about 7 years ago | (#20792519)

weak underwriting standards have led to record number of homeowners entering the foreclosure process

I've never understood the wildly inflated home prices in some areas. Assuming that these are "market prices" and not crazy owners' wished-for buyouts, at some point no one will be able to afford to own a home.

What happens then? A house market crash?

The only people that win from high real estate prices are those that cash-in and move somewhere cheaper, the lenders (usually) and the agents.

Re:In for a Penny... (0)

Anonymous Coward | about 7 years ago | (#20792609)

Prices shoot up like that when there is to way too much credit. As long as people still qualify for insanely large loans and compete for houses, the prices will keep going up. This goes on until the lenders come to their senses, which cuts demand, and suddenly people realize they are in a house they can't afford and try to sell, which increases supply. Naturally, prices fall, and sellers start to panic when they discover that they'll be upside-down even if they can find a buyer. Suddenly everyone wants to sell before prices get any lower, and *boom* market crash.

The feedback loops magnify the problem, but the engine driving the boom/bust is easy credit.

Re:In for a Penny... (1)

vtcodger (957785) | about 7 years ago | (#20792803)

***Prices shoot up like that when there is to way too much credit.***

A bit more complex than that. You also need for lenders to be making imprudent loans. It is perfectly possible -- at least in theory -- to be awash in credit, but not to be using it to fuel huge bubbles. You up margin requirements on securities, have minimum down payment requirements, forbid issuing of most types of financial derivatives, etc. Without NINJA (No Income, No Job, no Asset) loans and the like, the bubble has trouble forming. For example, at one point in the 1990s, interest rates in Japan were literally zero. You could borrow all the money you wanted if you had good credit. But the people who wanted to borrow money didn't have good credit and the people who had good credit had no interest in borrowing. Not only was there no bubble, there wasn't even a modest surge in economic activity.

Re:In for a Penny... (1)

drgonzo59 (747139) | about 7 years ago | (#20793351)

This is all in the hands of the bankers. Let's face most people are not very bright. If someone will give them a credit to buy a house they can't really afford, they'll take it. They don't understand what an adjustable rate it, they don't understand percentages, exponential growth, and how banking system works. If someone is giving away loans like candy, there will be someone else willing to take the candy.

Now the question is this: Are banks stupid as well? They are the ones that actually do know what can happen, they do know what all those things are, they can reasonably predict the future (they wouldn't be able to stay in business if they didn't). I can't help but believe that they do it on purpose. All the money in this country (and thus mostly everything else in the long term) is controlled by the Fed. They can at will create crashes and booms. Not only to they control the interest rate, they control the rules under which its member banks issue loans and how much reserve each bank should have on-hand. Either way, with a boom or a crash, because it can creates, they will profit. They money we have isn't real money, it is money because the Fed says so. And who profits? Well, we don't know, because the Fed is a private bank and doesn't disclose who its investors are. Cue the conspiracy theorists. Step right up, get yer' tin foil hat!

Re:In for a Penny... (1)

xjerky (128399) | about 7 years ago | (#20794547)

This is why I never understood how the Fed lowering interest rate ever helps anything when it comes to real estate. I almost bought a house in 2000, when rates were higher. Then rates lowered, and people realized they could buy a house for cheaper, which lead to an increased demand for houses, which drove up the price of said houses. In the end, people are paying more per month on a house now than they would have if they bought it in 2000. So, why do people go gaga over a lower rate in the first place?

Re:In for a Penny... (1)

DavidShor (928926) | about 7 years ago | (#20795053)

"This is all in the hands of the bankers. Let's face most people are not very bright. If someone will give them a credit to buy a house they can't really afford, they'll take it. They don't understand what an adjustable rate it, they don't understand percentages, exponential growth, and how banking system works. If someone is giving away loans like candy, there will be someone else willing to take the candy."

But not you, you are financially responsible, unlike the unwashed masses.

Elitist.

Re:In for a Penny... (1)

Datasage (214357) | about 7 years ago | (#20792681)

Everything is driven by supply and demand. In the case of the housing market, weak lending practices created a demand much greater than the market would support under normal conditions. It's not hard to predict that the market would eventually catch up to this.

If you just bought a house, your pretty much screwed, unless you plan to stay where you are for the next 20-30 years. Prices will likely drop over the next 2 years or so depending on your market. If you have to sell, you will have a mortgage larger than the value of the house.

I think its unlikely we will see an equivalent housing boom again. Unless banks and mortgage lenders don't learn from their mistakes.

Depends on the Market (1)

SRA8 (859587) | about 7 years ago | (#20793197)

Depends on the market and whether local salaries can support local housing prices. Take NYC -- housing prices continue to rise significantly despire all the market troubles? Why? - Because the average banker (there are thousands of them) can make $350k these days, at that point, an $850k studio makes perfect sense. - Because when two bankers, each making even a modest $120k get married, their combined buying power easily affords them a $1M 1B apartment - Because the worthless dollar allows Brits and Europeans to easily purchase real estate as vacation homes But overall, yes, I agree, home purchasers will have to whether the storm depending on when they purchased their home and for how much. Otherwise they risk being underwater.

Re:In for a Penny... (1)

dbIII (701233) | about 7 years ago | (#20793611)

I've never understood the wildly inflated home prices in some areas

I've never understood why it happens over and over. The current thing has nothing on New Orleans in the 1850s (or thereabouts) - but still ...

ING acquires deposits (4, Informative)

4thAce (456825) | about 7 years ago | (#20792535)

Here is the link on the ING site [ingdirect.com] .

The acquisition further strengthens ING DIRECT's position as the leading direct bank which aims to meet the financial needs of "Main Street, USA."
I hope their lending requirements are a little more solid (I hold an Electric Orange account there).

It would seem so (4, Interesting)

Sycraft-fu (314770) | about 7 years ago | (#20792665)

ING Group is pretty major, I don't think they are going under any time soon (ING Direct is one of their divisions). However if it does, you needn't worry as mentioned this is what FIDC insurance is for. Up to $100,000 of your deposit is covered by the FDIC. So unless you've got more than that in there, you are fine. If you do have more, may I suggest you seek the services of a financial consultant, as that is too much money to just leave sit in a bank account, even one with a reasonable interest rate.

Re:ING acquires deposits (3, Interesting)

tburkhol (121842) | about 7 years ago | (#20792883)

I hope [ING's] lending requirements are a little more solid (I hold an Electric Orange account there).

ING only bought the deposit accounts. Most of NetBank's mortgages are going to Everbank, apparently with the bad one staying with FDIC until they can find a sucker^wbuyer. In any event, deposits at NetBank are insured, so few account holders will lose money (the exceptions being about 1500 people who had more than $100,000 on deposit.

The FDIC has a whole list of failed banks [fdic.gov] . Apparently, it happens with some regularity, and it seems to be mostly a non-event for bank customers. Sucks for employees and shareholders, but that's business.

Re:ING acquires deposits (1)

fimbulvetr (598306) | about 7 years ago | (#20794153)

You're fooling yourself if you think that FDIC insured is going to be worth more than two squirts of piss when the day comes that ING fails. If a depression or stagflation take it down, that $100,000 likely won't buy you a loaf of bread based on current circumstances.

I'm not trying to chicken little here, I'm just trying to say that "If something could take ING (and similiar banks) down, that something is going to have widespread effects on many, many, more things".

Misleading Summary (1)

MikeB0Lton (962403) | about 7 years ago | (#20792569)

"They had significant problems with respect to loan underwriting, poor documentation, and a high amount of early payment defaults..."

According to the article, it wasn't just that the bank failed due to the mortgage crisis, it was that they poorly ran their bank. I worry a little about ING as well because they are promoting their ARMs so much. I've tried to find details on a 15 or 30 year fixed mortgage from them and cannot find it.

Re:Misleading Summary (1, Insightful)

Anonymous Coward | about 7 years ago | (#20793315)

ARMs per se aren't a problem. Actually they're generally a very smart choice. 30 year fixed is usually a pretty stupid thing to do (you pay too much).

Interest-only and Option ARMs are a completely different beast -- those are the exotic products with lousy underwriting standards that got so many people into so much trouble. They are useful financial products for certain people in certain situations but they should never have been offered to so many people nor should anyone with half a brain and any sense of responsibility have ever rated widespread debt based on such things as anything other than "extremely risky -- run away, run away". The twits that thought otherwise were in love with their own bullshit.

Net 2.0 meets Reality 0.0 (1)

KwKSilver (857599) | about 7 years ago | (#20792601)

FTA:

NetBank's stock price traded around $15 a share in 2004, but it declined and then fell below $5 a share in early 2007. Shares of NetBank fell to $0.07, down $0.01, on Friday.
Damn that pesky old real world!

House prices in the USA? (0)

Anonymous Coward | about 7 years ago | (#20792621)

Just out of interest, what sort of accomodation, if any, can you pick up for EUR30K (USD42K ish says online tools) in the USA nowadays ? (that's about 1/10th the price of a 1-bed studio apartment in Dublin, Ireland)

Re:House prices in the USA? (1)

Planesdragon (210349) | about 7 years ago | (#20792737)

For about $40,000, you can get a small one or two bedroom apartment either in the midwest or in a rural town here on the eastern side.

In my city exactly, at fair market value, you could get about 1/5 of a four-bedroom house. For $400,000, you could buy two.

Or, one one-bedroom studio in Manhattan.

Re:House prices in the USA? (0)

Anonymous Coward | about 7 years ago | (#20792789)

Or, one one-bedroom studio in Manhattan.

I think he wants to buy, not rent.

Re:House prices in the USA? (1)

EVil Lawyer (947367) | about 7 years ago | (#20794429)

There's no such thing as a "one-bedroom studio." If it has a separate bedroom, it's not a studio.

Also, studios go for about $550K and up these days, with 1BR apartments going for $850K+.

Re:House prices in the USA? (1)

Travy.b (815549) | about 7 years ago | (#20792877)

Or a very very rundown place in Perth, Western Australia: "Perth's median house price peaked at $564,000 in November 2006, when Sydney's median price was $515,000."

Ok - so $1AU is Currently 88.54 US cents, but even taking that into consideration it is ridiculously overpriced. Markets are slowly realising and it has since fallen to $462,000.

Figures taken from: http://www.news.com.au/adelaidenow/story/0,22606,22010311-37037,00.html [news.com.au]

Re:House prices in the USA? (0)

Anonymous Coward | about 7 years ago | (#20793419)

You guys are lucky. In or around Ljubljana (capital of Slovenia - Europe btw :)) a used two bedroom apartment sets you back about 170 000 EUR (cca 240 000$). A few years old house would be about half a million euros (700 000$). And that's a house with 180 m2 (1300 sq ft). If you're buying 20-30 year old houses the price drops to about 300 000 EUR.

And no, the paychecks don't make up for the prices - we make less than americans.

Re:House prices in the USA? (1)

sTalking_Goat (670565) | about 7 years ago | (#20792875)

In California you're pretty much SOL under 200K and you're looking at 300k if you want to live in any reasonably sized city.

Re:House prices in the USA? (1)

winkydink (650484) | about 7 years ago | (#20793489)

$300k won't buy you a dumpster in Santa Clara County, home to Silicon Valley. Median home price for Aug 2007 was $770k and average selling price was $944k.

Re:House prices in the USA? (0)

Anonymous Coward | about 7 years ago | (#20794773)

$300k won't buy you a dumpster in Santa Clara County
Stop talking out of your ass. You can easily buy a one bedroom condo in Santa Clara County for $300k. I am looking at the MLS for the city of Santa Clara, with twelve properties for less than $300k. For San Jose, I see over fifty properties. There are very nice two and three bedroom houses for less than $600k in the county.

Re:House prices in the USA? (1)

mzs (595629) | about 7 years ago | (#20794957)

Yeah $300k plus $300 per month assorted condo fees and there are some pretty bad parts of San jose where you would want your kid growing-up.

Re:House prices in the USA? (0)

Anonymous Coward | about 7 years ago | (#20795043)

You can get a manufactured home for less than $40k in California. I see several MLS properties in Eureka, Sacramento, and Redding. In Redding, there are over fifty houses for under $200k.

Re:House prices in the USA? (1)

TykeClone (668449) | about 7 years ago | (#20793503)

In small midwestern towns (not cities), about $40K would get a decent, but not new, house. Of course, these are areas where housing valuation hasn't boomed like it has on the coasts.

If, however, you were looking at farmland, $40K will get you maybe 8 acres of good corn ground at best.

Re:House prices in the USA? (1)

skeptictank (841287) | about 7 years ago | (#20793681)

That would get a small, old house in a very rural area, say 50+ miles from any major population center or anything else of potential interest. 3 to 5 times that much would get a nice house(1200sf to 3000sf) in most suburban areas in the South and Midwest. About 10 times that $420,000 to get a 2000sf house in Florida, Arizona, Nevada. The price goes up from there for New York City or California. The appraised value of property in California urban areas is about $1,100 per square foot (the last I heard, I would expect it to decline substantially from that over the next 5 years).

Baking in the America (-1, Offtopic)

postmortem (906676) | about 7 years ago | (#20792695)

None yet e'er drank a honey'd draught Unnmixed with cup of bitter gall, And cup of gall for honey equally doth call, That so, the mixture one may easier drink. Beg Ivan-beg of ancestry heroic, Like tawny lion fought against the Turks, On every side, and deep in gory woods: Half of his lands the Turks did take from him, The country delug'd was with blood, These Moslems slew his doughty brother, - Ferocious dragon, Urosh Voivoda! - On tune broad fields of Tchèmovo. Ivan his only brother mourn'd. Mourn'd him more, - the Voivoda Urosh; - Than were he mourning both his sons; Mourn'd him more, the Voivoda Urosh, Than he could mourn a whole lost land; Mourn'd him more, the Voivoda Urosh, Than he could mourn the loss of both his eyes; Not dearer they to him than brother Urosh. Full many a time and oft the hero may Excite high heaven unto mighty laughter! Ivan with cup on high vow'd direful vengeance, Drinking the toast with consecrated wine. He lets his white hair fall upon his shoulder's. His white beard curling down unto his waist; With his old hands he grasps his sword and lance; Blood-sprinkled both his weapons and his arms, At every step he fells a Turkish foe; The old man bounds as were he nimble youth! O dear my Lord, it sure must be a dream, That on this wise an aged man can leap! Good fortune past returns to him again: At Karoutché upon Tsrmnitsa's boundary, Of whole band of fifteen thousand Turks, Not one of them escap'd alive; Their marble tombs, which men still see, Attest the glory of Prince Tsrnoyevitch: God grant mercy to the soul of Urosh. Wondrous offerings made men to his memory!

FDIC insurance (1)

ortholattice (175065) | about 7 years ago | (#20792701)

It looks like 1500 people had $109 million over the 100K FDIC insurance limit - an average of about $73K - so they'll probably lose it. Many of these will probably be small amounts, say accumulated interest on $100K deposits; at other extreme, there a likely an unfortunate few who will be in very bad shape, essentially having lost most of their life savings, if they put all their eggs in this one basket.

Most banks do not try to discourage deposits more than $100K. I recall seeing offers of jumbo CDs starting at $100K, for a slightly higher rate. The very first interest payment, therefore, is uninsured.

An E*TRADE salesman once tried to convince me that a deposit of over $100K was quite safe and that the FDIC insurance is for a worst-case scenario that was essentially impossible to happen. He said lots of people have over $100K and implied I was paranoid even to bring it up, in an attempt to get me to consolidate all of my accounts with E*TRADE (which, at the time, offered a higher interest rate).

Re:FDIC insurance (1)

Rich0 (548339) | about 7 years ago | (#20792747)

Yup - why anybody would deposit more than $100k in a bank account is beyond me. Banks pay horrible interest - they're only useful for day-to-day liquid activities without large balance requirements, and due to the fact that in the US they're insured up to $100k.

If you have more than that you're much better-off investing in a mutual fund of some sort. Even if it is just a money-market fund. Most of those at least have private insurance - it won't protect you if the stock market completely crashes, but it will protect you if your investment company goes out of business and somebody walks off with the funds.

The FDIC was designed to keep average Americans from losing their shirt in the event of a bank failure, and to promote general confidence in the banking system by average people. It wasn't designed to cover people with hundreds of thousands of dollars - these are not people who should require government bailouts. If you can earn that kind of cash you should have enough sense to read up on what to do with it. Sure, lots of middle-class Americans have that kind of cash in their retirement accounts, but somebody with a decent-paying job that likely required a college education should know not to just take bank ads at face value...

Re:FDIC insurance (1)

tburkhol (121842) | about 7 years ago | (#20793003)

Yup - why anybody would deposit more than $100k in a bank account is beyond me.

I suspect few of these $100k accounts are somebody's checking account. I suspect these are people who have several staggered, long-term certificates of deposit. eg: 5x$25,000 10 year CDs = $125k. This could be a conservative retirement investment, and someone not paying attention might think that "FDIC insured to $100,000" would apply to individual accounts and not the aggregate. Netbank's CDs probably paid around 5-6%, which is almost as good as a bond, and carries that magical FDIC insurance.

Re:FDIC insurance (1)

everphilski (877346) | about 7 years ago | (#20793047)

OK so keep 2 of those CD's as your 'safety net' and aggressively invest the rest of it. If you are under 40 you don't have much to lose.

I have most of my money in an agressive allocation fund with my investment company, and the historical return rate is 11%. Last year was over 16%. I've broke double digits this year despite the doom&gloom you hear everyone talking about. There's no reason to keep all your money in CD's.

And if you are older, go for a less agressive investment scheme, and net 8-9%. Compounded, you will notice the difference in a few years. 100k in anything the FDIC can insure is crazy talk ...

Re:FDIC insurance (0)

Anonymous Coward | about 7 years ago | (#20794661)


It really depends on your situation. The 8-9% you cite is an average over decades: some years it may be 20%, some years it may be -10%, and it's almost impossible to tell which kind of year next year will be. If you're a retiree trying to make his savings last the next 10 years, it can be very expensive to suddenly have 10% of the principal disappear. Someone in that situation may be happy to trade the extra 2-3% annual return for the security of never having a losing year.

$50Million FDIC Insurance? (1)

SRA8 (859587) | about 7 years ago | (#20793235)

Shameless plug, as I built most of their tech architecture :-) -- check out Promontory Interfinancial Group's CDARS program. These guys take a regular bank's CD program and extend the FDIC coverage to $50M or more. The rates are basically the same and often higher.

Re:$50Million FDIC Insurance? (1)

TykeClone (668449) | about 7 years ago | (#20793761)

I don't know if they actually take the CDs, but many banks also participate in the CDARs program. There's a good chance that the bank that you are using participates and can get you a fully insured CD greater than $100K.

If I remember right, the head guy for the Promontory outfit is a former head of the FDIC, and the program will do what it says that it does.

Re:FDIC insurance (1)

dhollist (811706) | about 7 years ago | (#20793377)

Yup - why anybody would deposit more than $100k in a bank account is beyond me.

This may be obvious, but the FDIC insured limit of $100,000 is applied to the entire financial institution, not each account, and it applies to the assets of your whole family, not each individual family member. An elderly friend of the family has her money spread out over dozens of different banks, and when there is a merger she is very diligent about rebalancing her accounts to stay below $100,000 per institution.

"The FDIC protects you against the loss of your insured deposits in the unlikely event that an FDIC-Insured Institution fails. If you or your family's deposit accounts at one FDIC-Insured Institution total $100,000 or less, your deposits are fully insured." [fdic.gov]

Re:FDIC insurance (2, Informative)

gunnk (463227) | about 7 years ago | (#20792749)

It may be worse than that: the FDIC insurance applies to checking and savings accounts, but not money market accounts. Money market account holders can get in line with other creditors during the bankruptcy proceedings. Moral of the story: if you have a money market account, make sure you know the financial health of your bank.

(Note that credit unions are insured separately by a different organization, so money market accounts there may be covered.)

Re:FDIC insurance (4, Interesting)

Rich0 (548339) | about 7 years ago | (#20792827)

It largely depends. Many banks have "money market" accounts that are classified as savings accounts as far as the FDIC is concerned and are insured. Many money market accounts are in fact uninsured as well.

Netbank had a "money market" account which was FDIC insured - at least as far as I'm aware (and I did take the time to find out).

I'm guessing it comes down to whether the bank wanted to follow FDIC rules regarding investments/limits/reserves/etc. Most money market mutual funds don't - but they're still very safe due to their investment profile. Also - most non-FDIC-insured money market funds tend to be privately insured against anything but investment risk.

Bottom line is - anybody with any kind of account no matter what it is called or where it is held should be aware of its FDIC-insurance status. Many banks have both insured and non-insured investment products.

Re:FDIC insurance (1)

Shawn Parr (712602) | about 7 years ago | (#20793191)

Netbank had a "money market" account which was FDIC insured

Parent is correct. I have a Netbank (now ING) 'Money Market' account that I started about a month ago. I was very concerned so I called the FDIC via the number they have published on the Netbank information sites and was assured that it was insured and all my funds would still be available.

The Netbank site is now back online, and you can get back in and see your accounts again. The big question for me, especially with the first of the Month on Monday, is what is happening with all my Bill Pay transactions. I'm pretty sure that any involving electronic transfer will be cancelled, however the ones that Netbank traditionally mailed out may have already happened, or may not have, and the FDIC people were unable to tell me anything about that with any confidence.

Re:FDIC insurance (1)

nhaines (622289) | about 7 years ago | (#20795049)

I checked into this, too (although I was quite relieved that I tend to pay my credit cards a couple days after I receive the statements, and not just before the due dates, so I'm covered for another month).

Any electronic bill transactions will be held until Sunday, but all direct deposits will be automatically transferred and electronic transactions will resume Sunday evening. As far as I can tell, there should be no interruption--we'll even continue using the NetBank website for the next couple of months.

I keep my longterm savings in an Orange Savings account at Ing Direct (I'm just starting again, you see), and I have been rather pleased with them, so I was relieved to see that they had assumed NetBank's consumer bank accounts.

Re:FDIC insurance (0)

Anonymous Coward | about 7 years ago | (#20792951)

the FDIC insurance applies to checking and savings accounts, but not money market accounts

FDIC insures money market accounts, but not money market mutual funds. This is one of those subtle distinctions of legal language that can be really tricky for investors, especially since language laziness results in both of them being colloquially "money markets." A MM account is essentially a savings account, where the bank directly holds and invests the funds, very often to finance its own mortgage business. A MM mutual essentially invests those deposits in the MM accounts of other banks, in short term loans, and other non-insurable instruments. The money in an MM account is held in trust by the bank; the money in an MM mutual is invested on behalf of the depositor.

Re:FDIC insurance (1)

coyote-san (38515) | about 7 years ago | (#20792823)

One small nit -- they're only GUARANTEED to 100k. In practice I believe they've always covered accounts fully. That makes sense, if your goal is to promote public confidence, while leaving yourself an exit if a major bank fails.

Re:FDIC insurance (1)

un1xl0ser (575642) | about 7 years ago | (#20793001)

VIII. Dividend Information
Due to the projected sale of assets of the former bank, the FDIC is in the position to provide each uninsured depositor with an dividend equal to 50% of your uninsured amount. These funds will be deposited directly into your account net of your uninsured portion.
Dividend Information on Failed Financial Institutions contains general information about the dividend process.
http://www.fdic.gov/bank/individual/failed/netbank.html [fdic.gov]

Netbank? Which Netbank? (1)

pavium (557126) | about 7 years ago | (#20792731)

If it wasn't for the fact that I know (slashdot) articles tend to be US-centric, I would have been worried.

The Commonwealth Bank of Australia uses the name 'Netbank' for its on-line banking -- it's a pretty generic name.

By coincidence, just before surfing to slashdot.org I used the "Commonwealth's" Netbank.

It's still working fine.

Talk about timing... (1)

ActusReus (1162583) | about 7 years ago | (#20792851)

A couple of weeks ago I ordered a new Prius from the Toyota dealership, and moved $10,000 from my brokerage account to my NetBank account in preparation for the down payment. I scheduled to pick up my car on 9/28. Right before heading up to the dealership, I went online to double-check my account balance one more time... and nearly crapped a Toyota Prius in my pants!

I do 90% of my shopping online, but online banking has been a touchy subject. I became a NetBank customer 6 or 7 years ago only because they bought my account from CompuBank... my PREVIOUS online bank that went belly up also. I know these failures were due to bad management and not anything inherantly wrong with an online model, but after the run I've had I just don't think I could trust an online-only bank again. Come Monday morning, I'll be switching my payroll direct deposit over to a credit union account... and saying farewell for good to banking through that series of tubes they call the Internets.

Re:Talk about timing... (1)

King_TJ (85913) | about 7 years ago | (#20793985)

Yeah.... I, too, was a long-time Netbank customer. Back when I first signed up with them, they were one of the ONLY ways to do free, unlimited online billpay.
Over the years, that turned into a "non issue" as practically all the other respectable banks and credit unions offered the same thing .... but I stuck with Netbank anyway, because frankly, I was screwed over and bumped around from bank to bank with my locally held checking account. (It seemed like every month or two, for a while there, whatever bank I was with was part of a merger with another bank. For a while, my book of checks had the name of a bank that was 4 or 5 institutions ago!) Given that history, Netbank was rock-solid stable by comparison.

I started to worry about Netbank's status when it started becoming tougher to make a convenient deposit. My electronic deposit of my payroll check was fine, but anything else I had to physically deposit was starting to become a pain. They had a list of "partner ATMs" supposedly in their network that you could make deposits at -- but I found the list started getting outdated, and Netbank made no effort to update it. (For a long time, it told me they had "Netbank branded ATMs" at all the Huck's gas stations in my city that I could use. Well, I found a grand total of *1* Huck's station that actually had one of those inside it. The other locations listed on their site were long since closed up. Then, the remaining Huck's in my town got purchased by Amoco/BP and the last remaining Netbank ATM went away with it.)

They experimented with the overnight deposits through any UPS Store location for a while, and that was great for me. But they discontinued that too, claiming it was costing them too much and wasn't used by enough Netbank customers.

And you could always request postage-paid envelopes to mail in a deposit directly, but half the time I'd fill out a request for more of those and would never receive them! When I did use one, Netbank seemed like they'd sit on the thing for over a WEEK before getting around to even opening it!

I've still got my account with them, mainly because I've been too lazy to open another account ... but now, I have the necessary motivation. This whole situation sounds like it's going to be a "bumpy ride" if I leave it alone. Nothing against IMG Direct or anything, but I just don't have great luck with these bank mergers and changes.... I'd rather duck out now, instead of hassle with a direct deposit getting mis-routed, or my first few deposits getting lost in a black hole someplace when I put them in some partner's ATM, or ??

Mortgage defaults (2, Insightful)

DerekLyons (302214) | about 7 years ago | (#20792975)

The defaults aren't something that 'just happened' to them - they chose to get involved in what anyone should have seen as being an extremely risky market. (Buying mortgage paper on the secondary market.) But the ultimate culprits are the (all but unregulated) mortgage companies, who loan the money then promptly sell the paper - they've taken their money and profit and are walking away virtually scott free from this developing crisis.

Re:Mortgage defaults (1)

Rich0 (548339) | about 7 years ago | (#20793075)

But the ultimate culprits are the (all but unregulated) mortgage companies, who loan the money then promptly sell the paper - they've taken their money and profit and are walking away virtually scott free from this developing crisis.

I dunno - they wouldn't do it if people didn't buy the paper.

Suppose I find ten homeless people and loan them $100 each, and then sell those loans to somebody for $1100 - netting $100 in the process? As long as I was honest about what I was selling, have I done anything wrong? Sure, whoever bought the loans will lose just about everything they bought, but as long as I was honest about what I was selling isn't that on them?

The real culprits are people who buy loans without any care for whether the debtors can make the payments. And we needn't be too upset about them - they'll just lose their shirts when the market corrects themselves.

Alternatives (2, Interesting)

supertall (1163993) | about 7 years ago | (#20793013)

I've enjoyed using Netbank for several years now, and as someone who moves around a lot having a branchless bank equally accessible from anywhere in the country has been nice. They even have (had) ATMs here in B.F. Mississippi. I'm sad to see them go.

Are there similar alternatives to Netbank that anyone would recommend?

I went with USAA. (2, Interesting)

Kadin2048 (468275) | about 7 years ago | (#20793795)

For reasons that had nothing to do with any intuition of an impending collapse (I was actually most annoyed that they didn't play nicely with Mac Quicken), I moved all my deposits from NetBank to USAA a few months ago. I've been very happy with USAA; they offer more online features and a better website UI than NetBank did, excellent customer service, and ATM-fee reimbursement (up to $10/mo or so). Their interest rates on checking aren't quite as high, but that's a small price to pay, particularly since it serves as encouragement to not build up a big balance in checking, but instead keep savings in a savings account and investments in investment accounts. USAA also doesn't gouge you if you want paper statements, although they give you the option to disable them and get everything online if you want.

In retrospect, now I know why the people at NetBank didn't seem too surprised when I closed my account down and moved everything out. At the time I was a little surprised that they didn't try to keep me as a customer at all, particularly since I'd been with them since the very beginning.

When NetBank first started, they were really a joy to work with. Their website was first-rate, their customer service was awesome (I recall calling them up in the middle of the night once and getting an actual human operator, not a "push x for foo" prompt tree), and they had a lot of nice little extras. Initially, they even sent out paper account statements on color, 3-hole-punched letterhead.

The nice paper for the statements went away in the first round of cost cutting, as did the human operator on the phone. The second round was charging $3/mo. for paper statements at all, and charging for checks. Then the website stopped getting any updates. And the last straw for me was when they did something funny to the backend system, and I started having to click "download transactions" twice in Mac Quicken in order to get it to download (the first try would *always* fail). After a few years of that, I got fed up and decided to leave.

In hindsight, I guess my timing was pretty good.

Good. (1)

chroma (33185) | about 7 years ago | (#20793053)

I signed up for an account with them a couple years back and they socked me with several hundred dollars in fees within the first month. Good riddance.

Re:Good. (2, Informative)

Rich0 (548339) | about 7 years ago | (#20793135)

You neglect to mention why. Netbank doesn't have minimum balance fees or anyting onerous in general, although if you open an account with $100 and proceed to write 75 checks for $1000 each you would easily run into the scenario you describe at any bank.

Netbank grew so big by being one of the few banks that DIDN'T charge fees for anything and everything. Generally the only thing they charged fees for was stuff that you'd expect - frequent withdrawls on a money market account, overdrafts, etc. This stuff incurs cost and isn't normal business and have been subject to fees by just about every bank since the dawn of time.

Re:Good. (0)

Anonymous Coward | about 7 years ago | (#20793567)

NetBank charged me $3 a month for years to receive the monthly statement in paper form that every other bank provides for free. About a year or so ago they suddenly stopped charging for it. I suspect that they were breaking a banking law all this time and decided to come into compliance without properly reimbursing their customers for the faulty charge. At any rate, they did other things I did not like. But I kept a little money in an account with them just for convenience in certain situations. I concluded a long time ago it is not worth my time or hassle to get certain businesses to treat their customers appropriately -- the market will take care of the businesses' bad practices eventually. In this case, I was right. Since I had been thinking of opening an ING account, this works out for me two-fold.

Re:Good. (1)

Rich0 (548339) | about 7 years ago | (#20793703)

Does ING actually provide paper statements? It seems like charging for paper statements is becoming standard practice in many arenas. In some cases it is standard but there is a monthly charge just for having an account...

Re:Good. (0)

Anonymous Coward | about 7 years ago | (#20793735)

Most banks do not charge monthly fees for basic accounts and do provide paper statements. The reason I suspect they were violating banking laws all those years is they did not tout the new arrival of paper statements you did not have to pay for. Seems like they did not want to draw attention to the fact they used to charge for them. If this was a voluntary decision by them, even a significantly inept marketing department would have ben trumpeting it as a major new benefit to its customers.

Re:Good. (1)

Rich0 (548339) | about 7 years ago | (#20793897)

Well, they do cost money - they probably didn't advertise it because they wanted their customers not to request them.

Just about every company I do business is constantly offering to switch me to "free" electronic statements. :) I prefer paper and stick with it, although electronic would probably be more reliable if anything.

Re:Good. (1)

chroma (33185) | about 7 years ago | (#20794359)

At this point, it's a dead horse. E-mail if you want details.

And I care why? (1)

Valar (167606) | about 7 years ago | (#20793225)

I mean, mostly I care because its a bank failure in general. I don't care any more or less because it's 'OMG ONLINE BANK WOW'. And of course, you would expect some banks to fail here and there right now: a lot of them made poor lending decisions and deserve the consequences. The good news is we've learned from previous bank failures and now at least most customers won't be out anything.

If you really want an online bank every major bank offers online banking. Some have more features than others, but there are a few where you can get an almost full service banking experience without ever visiting a branch. Until I started working at my bank, I didn't step foot in a branch for over a year. So I would suggest to find a major player, scope out their online banking, and pick someone who has branches in your area anyway, just in case you happen to have to conduct a rare in person transaction. If you don't think you need any branch banking ever, eTrade is in the bank business and they appear to be very financially stable.

Lucky me (1)

acm (107375) | about 7 years ago | (#20793305)

Wow, guess I got out just in time. I pulled my money out of there a couple months ago, closed the account, and moved it into EverBank [everbank.com] . When I signed up for NetBank in 2004, they had one of the most competitive interest rates for checking accounts available (according to Bankrate.com [bankrate.com] ). However, as time went on I noticed there were more and more online banks that had better deals. I suppose it wouldn't have been too bad, it looks like all of NetBank's customers automatically are getting transferred to ING Direct [ingdirect.com] .

Re:Lucky me (2, Informative)

DavidTC (10147) | about 7 years ago | (#20793557)

Even if they weren't moving them, saving and checking accounts are insured up to $100,000 in the US.

Although treat that as per-bank, not per-account.

NetBank customer blog (0)

Anonymous Coward | about 7 years ago | (#20793393)

Bank Run in England (1)

geoff_smith82 (245786) | about 7 years ago | (#20793779)

The Northern rock bank run caused the government of england to guarantee the entire country's banking system. This was a BIG mistake because now they have socialized the losses and kept the profits privatized. This will make the banks even more risk taking, knowing that they will be bailed out if anything goes wrong. And the taxpayers could be up for HUGE amounts of money to bail the banks out.

Re:Bank Run in England (3, Informative)

TykeClone (668449) | about 7 years ago | (#20793801)

The banks won't be bailed out nor will the owners or shareholders of the banks. The banks' customers will be.

Re:Bank Run in England (2, Informative)

DamonHD (794830) | about 7 years ago | (#20794457)

Simply not true. The Treasury/BoE agreed to underwrite the NR deposits in place at the time of the 'run'. Nothing else and for no other bank.

I'm pleased that NR has suffered for its poor business practices, and I'm pleased that by-and-large its customers will not.

Rgds

Damon

Learning your bank closed on Slashdot (1)

singularity (2031) | about 7 years ago | (#20793869)

I have been a happy NetBank customer for over five years now. Really good customer support, no fees on basically anything. I only did checking and savings account, and it is a shame that a bad housing market brought all of it down, but that is the way it goes.

I move around a lot, and with direct deposit I never felt the need for a brick-and-morter bank to ever go to. It never made sense for me to pay for the buildings that I was never using. NetBank also had some innovative features to make things easier like free overnight check deposits through any UPS store. I will definitely miss it.

It was really strange logging onto Slashdot this morning and learning that my bank had closed. I supposed I get to spend today researching online banks. I might end up sticking with my new ING account.

Re:Learning your bank closed on Slashdot (1)

i)ave (716746) | about 7 years ago | (#20793979)

I've been using SalemFive http://salemfive.com/ [salemfive.com] for four months now and have been wildly impressed. My "eONE checking account" had no setup fees, has no minimum acccount balance, they pay me 5.00% interest compounded daily and credited monthly, they REIMBURSE ATM FEES up to $20/mo. (I believe this is the figure, I've never exceeded the amount)and they even gave me my first 25 checks free. I keep thinking this is too good to be true and soon something will change, but I'll be damned if it hasn't been simply the best online banking solution. Oh, and their customer support is fantastic. Honestly, with options like this out there, I can't imagine you'll be too disappointed for long.

--Dave

Here's the proper link (1)

i)ave (716746) | about 7 years ago | (#20794053)

Sorry, the link I gave you is to their main banking page, in order to sign up for an eONE account, you need to use this link http://www.salemfivedirect.com/ [salemfivedirect.com]

--Dave

Etrade Bank CD? (1)

drake2 (709565) | about 7 years ago | (#20794303)

Has anyone dealt with E*Trade Bank. Specifically the E*Trade Bank 1 Year CDs paying 5.1% APY. I have been using HSBC Online Savings, which is great, but they lowered interest from 5.05% APY to 4.5% APY with the half point drop by the Fed. I assume most other variable rate online savings will shortly follow suit making it pointless to move money around. Any fees for opening account, penalties for early withdrawal/minimum balance, or other problems with Etrade Bank. We have a local credit union which is currently paying 5.25% on an 11 month Share Certificate, but they charge a refundable on closing $10 to open an account so that the effective interest for amounts under 10,000 is lower than online savings if the account is never closed.

Dang (1)

snizzitch (976516) | about 7 years ago | (#20794395)

Yeah, it is a shame that they went under. I was with them for almost 100% of my almost 11 year military career which just ended, and needless to say, I appreciated the worldwide accessibility of their system, as well as the nice online bill payment options. I was very happy with their service right up until the FDIC notice was posted on their website. The customer service was good and the lack of fees was nice, and they even had a few ATMs in my local area. No, I didn't lose anything in this process and I am still able to log in to the same website pretty much seamlessly, but of course I'll be looking for some other banking option here in the near future.

My Wife Was an Analyst for Netbank (4, Informative)

Ray Radlein (711289) | about 7 years ago | (#20795017)

My wife used to work for Netbank, at their HQ here in Atlanta.

After her previous company downsized, she talked to Netbank about a job; her first in-person interview was scheduled for September 11, 2001. Oooops. We saw the second tower hit live on the Today show right before she left; once she got there, the nation's entire financial industry went into lockdown, and she spent the whole day sitting in the lobby of their offices. Heh. Was that some kind of omen?

Anyway, she got the job, and went to work doing business analysis -- which promotions actually drew in new customers, what percentage of new customers retained their accounts, et cetera; she also maintained the list of ATMs that were in service and in their network; and was responsible for generating the customer lists for both the various e-mail contacts and the annual privacy policy mailings ( <geek_meat> SAS and SQL, mostly </geek_meat> ).

She really liked her job, and she liked her co-workers.

The turning point for Netbank, IMHO, came after the retirement of one of its founders and a merger with another online bank called RBMG which was located in Columbia, SC (which is, ironically, where we lived before we moved to Atlanta years ago). There were the usual issues of corporate culture which arise during mergers; there were issues regarding differing customer expectations (she ran studies on customer surveys which showed dramatically different attitudes, expectations, and opinions between customers from RBMG and customers from Netbank); there were issues arising from the fact that, although the company retained its Netbank name and identity (and the deal was structured as a Netbank acquisition of RBMG), the center of gravity for the new company was in Columbia, with the former RBMG; and, frankly (again, IMHO), there were issues with RBMG's upper management and corporate strategy.

Netbank "Classic" had been focussed on, and content with, being, well, a bank. Checking and savings, CDs and Money Markets; you know the drill. RBMG, though, had aspirations both grander and farther afield, starting with mortgages (in fact, the "MG" in "RBMG" stood for "Mortgage Group").

That didn't work out too terribly well.

By last year, there were some signs of strain. While the overwhelming majority of folks working in Atlanta and Columbia (and Jacksonville) were really great, and on the ball, there was a bit of a corporate malaise; RBMG ran what seemed to me to be a less employee-friendly operation (one of the first things they did, for instance, was move Netbank's Atlanta HQ from its basic "A" or "B" office space into a semi-crappy converted former retail space which was, at best, a high "C" quality office space). The bad vibe was subtle at first, but it was certainly there; and as the mortgage business began sucking more and more, money got tighter and tighter, and things got less and less functional.

Finally, as last year began to wind down, more and more employees started to jump ship from my wife's group. Eventually, it got to the point where she was more or less forced to jump ship, simply because everyone else already had, and she would be left in department that couldn't possibly do all of the things it was expected to.

By the time she left, right at the end of the year, there was a really grim air about the place; and we got to look on in horror this year as her company stock shares rapidly declined in value to the point where it wasn't even worth bothering to sell them.

We still have a Netbank account with a small amount of money in it, and a lingering bittersweet fondness for the brand and the people who worked for it; but we're certainly not regretting her decision to leave, that's for sure.

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