Friday, July 18, 2008

Is YOUR bank in financial trouble?

I read this story today on CNN.com about a "secret list" that the FDIC keeps on banks that are in financial difficulties. For some reason Blogger won't let me create an HTML link, so here's the website:
(http://money.cnn.com/2008/07/18/news/economy/fdic_list/index.htm?eref=rss_topstories)

As a fairly new investor and someone who grew up without a lot of money, but hopes to acquire some throughout my life, this story troubles me. Basically, it says that the FDIC-- the organization that insures the money that banks hold--knows when banks are in trouble, but won't release the information to the general public.

Their rationale is that only about 1% of the banks on the list actually fail, the rest just need some help restructuring or whatever... So, my question is, if a bank is not structured properly to at least maintain, and is in danger of losing a great deal of money (money that isn't theirs, by the way), shouldn't the bank's customers KNOW about it? Wouldn't it create a system whereby banks should be held more responsible for how they use money that isn't theirs?

I mean, seriously, if teachers need to be held accountable for whether Johnny Snotnose learns his alphabet, shouldn't banks be held accountable for how they manage our money? If schools are required to publicly post grades on standardized tests, shouldn't banks be required to publicly display their profit (or loss) margins?

Why would the FDIC hide this information from consumers? If I had the choice of Bank X or Bank Y, and Bank X showed up on a list that said something to the effect of "oops, look what they did with the money." I would most likely take my business to Bank Y, which isn't on the list. Don't government officials say the same thing about schools? "Well, if you can't get your kids to learn, then parents should have a choice of where to send their kids!"

It's a basic economic principle-- if I can get a better deal for my money (higher interest at a bank, better teachers at a school, more items at the store), I'll go to the other place-- customer satisfaction and security of mind!

I'm not an economist, nor am I an expert in money matters, but I do know that it's not right to try to hide the fact that a financial institution may be failing when people invest their money into such a place to try to avoid the pitfalls of risky finanical behavior by themselves or someone else!

Come on FDIC, Share the information! It's our money, not yours!

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