Find a Better Bank
I've been banking with Wells Fargo since the mid 90s when I moved to California. I've been getting tired of Wells Fargo specifically and big commercial banks generally for a variety of reasons:
- Their penalty and fee schedules are predatory. Minimum balances, overdraft penalties, ATM fees, and other issues can get very expensive ( Read more... )
- Their penalty and fee schedules are predatory. Minimum balances, overdraft penalties, ATM fees, and other issues can get very expensive ( Read more... )
Keenly. That's what I was referring to when I wrote "not sure to what extent Ally's past as GMAC, helped them unfairly sweeten their deal".
On the other hand I've heard that GMAC Bank (a bank now headquartered in Midvale Utah and called Ally Bank) separated from General Motors Acceptance Corporation (a lending institution now headquartered in Detroit and called Ally Financial Services) prior to GMAC Financial (not bank) getting TARP dollars. What actually happened remains unclear, and I've been meaning to dig into it more as time permits.
In the meantime, I should clarify my objectives. One of my goals is to mitigate systemic risk, not "give a thumb in the eye" of anyone. As such I'm getting out of Wells Fargo, the nation's fifth largest bank which holds 364,120,000,000 in assets, to join Ally Bank whose two branches hold only $91,538,972 in assets. If Ally Bank fails, it will join the hundreds of smaller banks which have failed this year, rather than the large banks which were bailed out.
Of course that's one of my goals. My other goals are to get away from predatory rate schedules and start getting more interest and better customer service with fewer headaches, and that part seems to be working out pretty well.
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What actually happened is really obscure. No one knows for sure, and there are a number of people - journalist I read, Wall St bond traders I went to school with - people better connected than I - who tried to find out and weren't able to. There was definitely a back-door, off-balance sheet transaction that salvaged the company's obligations, and we're talking $125 billion of booked assets (other people's liabilities) that had a book value of less than 50 cents on the dollar and which was made whole entirely, in order to satisfy GMACFin's creditors with the bailout arrangement (they were beating down the door to liquidate all of GM's assets, that was the alternative option.)
Beyond that? Ally's obligations to the Fed/TALF/TARP right now, if any? Not clear.
I would totally support any inclination you had to give a "thumb in the eye" to too-big-to-fail banks, by the way. I am very happy with my accounts at a couple of tiny local community banks. I found these community banks by checking their financial strength ratings via Bankrate.com's Safe and Sound bank rating page, and using the zip code search, which I would recommend to you.
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The ones who were forced by the Fed to take TARP money, ones who were teetering on failure, or all banks that are too big to fail? In the context of this post, these are separate groups.
Wells Fargo, my former bank, is was too big to fail but was generally *not* considered to have serious troubled asset ratios (at least until it absorbed Wachovia, which was). My new small local community bank, Sterling Bank, did not get TARP money but is offering decent interest rates to recapitalize because it is at great systemic risk and teetering on failure. Ally Bank may or may not have gotten the money that GMAC Financial got, but BankRate gives it four "safe and sound" stars.
I think your priorities are different than mine. If taxpayers have just finished giving trillions of dollars to banks to prevent them from failing, the last thing I want to do is willfully sabotage them back into failure. You might as well stab someone on his way out of a state-funded health clinic.
My primary interests (in addition to getting a good rate of return, avoiding inconvenience, and limiting my exposure to penalties and fees) are to minimize future systemic risk, minimize future taxpayer costs, and maximize future recovery of recent bailout costs. I'm *not* interested in acts of spite against personal affronts by unconscious money-making machines, especially ones that will potentially increase systemic risk or decrease banks' ability to pay us back.
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You've misinterpreted me. Go ahead and put your money in Ally Bank, all the while boasting that you're minimizing system risk by doing so; and insult anyone who claims otherwise. You'll get the intended result: everyone who will still tolerate conversing with you will praise your meritorious decisions.
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You initiated this conversation by asking me whether I "wanted to give a thumb in the eye" of bailout banks. I wasn't insulted; I took this as a metaphorical exaggeration to figuratively communicate your thought. I assumed you selected "thumbs in eyes" to emphasize spiteful intent toward the reprehensible "bailouts-for-all-as-long-as-they're-rich crew" in question. I didn't think you were saying my desire to change banks was "morally equivalent" to sticking my literal thumbs in anyone's literal eyes, just that this was how you wanted to represent the intent.
I wanted to raise two concerns in response. First, that banks are unconscious profit-pursuing, money-making machines who can't necessarily be faulted any more than sharks can be faulted for eating swimmers. (It might be a regulatory or legal concern, but not a moral concern requiring "eye for an eye" retaliation.) Second, that punitively withdrawing capital from a bank we've just paid dearly to recapitalize seems counterproductive. You shouldn't run on the bank after giving the bank TARP money to prevent a run.
I should have probably just continued your eye analogy by saying "you might as well put your thumbs in someone's eyes after you just bought them new glasses" but for better or worse I went with stabbing, assuming you'd interpret my metaphor as figuratively as I took yours. I might have said "one might as well stab someone" instead of "you might as well stab someone" to make the metaphor even less confrontational (not that you paid me the same courtesy with the eye-poking). In any case, neither of us are trying to say that stabbing or eye-poking are morally equivalent to anything. We're both speaking figuratively, I assume.
I'm sorry that you thought this meant I was "intending" to "insult you", but how is your eye-poking metaphor any less of a false moral equivalence than my stabbing metaphor? How is your suggestion that eye-poking might be well-deserved any less insulting than my observation that stabbing would be counterproductive? How does extending your metaphor (to negate it) make me the bad guy? More to the point, why shouldn't I assume that your "intended result" is to silence my disagreement with these unfair double standards with the same ease that you assume my "intended result" is to insult you into shutting up? I get the feeling that I'm reading your words a lot more carefully and giving you much more benefit of the doubt than you're giving me.
(We might have been on the wrong foot from the very beginning. Beginning a comment with "You do understand that…" seemed more than a little condescending, especially since I'd already referenced my understanding of Ally Bank's past history as a possible GMAC bailout recipient in the main post.)
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Anyway, you're right that we're on the wrong foot. I really wasn't sure that you understood the full implications of the Ally-GMAC connection, especially since I am not sure that anyone really understands them as the key information has not been made public. I learn a lot from your posts; maybe you had seen some key bit of analysis I'd missed. Wasn't trying to be patronizing.
I do think Ally Bank is just essentially continuing the bad guys' business under a new name and with a new bailout. While the bailout was unavoidable, I see no particular argument in favor of supporting the entities that made it possible, if better alternatives are available.
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