Bank Safety Ratings

Bank safety ratings should be considered when you are determining where to put your money.  With the uncertainty in the economy, the market scares my pants off.  I haven’t invested in the market for years.  The good news is, I didn’t lose much in the crash the past couple of years.  My record is well established; when I buy a stock, the stock doesn’t go down — the company goes under.  Real estate is a good idea, and I have done well, but I think it is time to have some cash in reserve, so I don’t want to dump every dime I have into more real estate.  I’m becoming paranoid enough that I don’t trust banks much either. (Not that I ever had a love affair with banks.) Keeping your “dime” in the bank can be risky today, and I’m not sure we’ve seen the bottom of the banking crisis.  You need to evaluate your bank, by looking up the bank safety rating, but how?

Banks are the place you are supposed to keep “secure money,” but with the interest rates they are paying, the mattress looks tempting.  Inflation scares me to death.  M2 (basically the amount of US money in print) has doubled and tripled in the past year.  We’ve gone from about a trillion dollars in circulation to almost 3 trillion in the past year.  I am sure there is a shortage of green ink in the world, because the US government is using it by the ship load to print more money.  The money has been printed, but it isn’t “floating around” yet, because people are now actually saving money.  The U.S. savings rate has gone from the negative to the way positive.  Everybody is hanging onto any extra cash they have.  Inflation won’t hit until people start to circulate their cash.  It’s a concept known as the “velocity of money.”  When people begin to spend, there is now no way major inflation can be avoided.

If your money is tied into a long term CD at 2% and inflation hits, your money suddenly becomes worth half as much as it was when you bought the CD. So what do you do with your little bit of extra cash?  Keep it liquid in a savings account?  If you are doing the savings account or the CD thing, you need to be careful.   You need to understand both the bank safety ratings have little to do with whether the FDIC may or may not cover you in the future.  (We think it will, but tomorrow’s world won’t be what we think it will be.)

Evaluate your bank, consider its bank safety ratings. The choice of your bank may mean life or death for your savings.  I’ve found a site that rates banks and is considered one of the best, but it is a little confusing to me.  Simply follow the links and instructions below.  By the way, you can also use the ratings to pick a bank.  Here’s how you get an independent rating on your bank.

To find your bank safety ratings:

Go to www.TheStreet.com.

1. On the blue tool bar just below the header for the site, there is a button called “Portfolio & Tools.”  It is over to the right.  Click on the button “Portfolio & Tools” and a drop down window will appear.
2. On the drop down window under “Portfolio & Tools,” near the bottom of the list, find “Banks & Thrifts Ratings,” and click on it.
3. A page will appear with a bunch of text.  At the bottom of that page (below the text) will be a “Search for a Rating” button.  Click on it.
4. There are several line entry areas at the top of the page.  Pick your state by typing it in the “State” entry line.  From here, you can guess at your bank’s real name, and enter it just above the State line.

You may be shocked when you see how your bank is rated.  These ratings are very accurate.  You can search all the A ratings in the state, B ratings, etc.  There again, it is hard to figure out how to get it to rate all the banks, so follow the instructions.

Search for all A rated banks in your state:

Make sure that the “Bank Name” information window is blank.  Then go to the “Rating” blank and select your rating using the drop down window.

Oh, as to my question, “Where do you put your little bit of extra money?”  The answer is, “I don’t know.”  When somebody figures out the answer, let me know.  Or, if you have any ideas drop me an email.  info@LegaLees.com, I’d love to hear what you all think.

By Lee R. Phillips