Gerald Celente is a world renowned trend researcher. The guy is super funny and always right on the money. He predicted long ago the world wide protests (including in the US) due to the economy. He often says, “When the people have nothing to lose, they lose it”. I was checking up on his latest interviews only to find out that his account with over $100,000 in it has been closed on (meaning it as a $0 balance now) due to the bankruptcy of MF Global (whom he had an account with since they bought out the company he did business with). They were one of the largest brokerage companies in the US.
This case illustrates my concerns about our economy. MF Global took customers deposits and gambled with it. The gamble went bad and they didn’t have the money to cover the customers accounts, and therefore went bankrupt. The question is what happens to the customers? The judge in the case has ordered the trustee to give some of the customers 60% of there accounts. I looked up on the gov FDIC page to see what is covered and found this: “Increasingly, institutions are also offering consumers a broad array of investment products that are not deposits, such as mutual funds, annuities, life insurance policies, stocks and bonds. Unlike the traditional checking or savings account, however, these non-deposit investment products are not insured by the FDIC.”
So what does this mean? To me it means that banks are using customers deposits to gamble. If it is an FDIC account you are unlikely to personally have any interruption in your service and will have access to your funds (according to recent case histories I looked at), however we as tax payers will be on the line for it. While banks do pay a fee towards the FDIC fund, but it is shrinking according to a 2009 NPR article If they were not to have enough they would borrow from the treasury department (i.e. the tax payers). If you have an account (or safety deposit box) that is not FDIC insured your screwed.