That is what OBAMA-ERA FDIC reform did to FDIC UNIFORMITY. FDIC protections from bank failures allowed ALL INDIVIDUALS to receive the same bailout. Below we see what we call FINANCIALIZATION OF FDIC------they have made derivatives and stock options of what was a FEDERALLY/PUBLIC-CONTROLLED PAYOUT.
We discussed yesterday how the FDIC AGENCY was tied to GLOBAL BANKING 1% with agents often working to see that FDIC FUNDS went to those committing the bank robbing crimes.
CORRUPTED FEDERAL AGENCIES NEED TO BE FIXED---NOT PRIVATIZED.
Obama and Clinton neo-liberals being far-right wing global banking PRIVATIZED FDIC----so when a bank failure occurs this TOP TIERING AS WINNERS now pertains to FDIC---FEDERAL DEPOSIT INSURANCE.
NOW, there is a SPECIAL PLAN------for those wanting that FDIC PROTECTION.
18 States Offer FDIC-Insured 529 Plan Options
By Kathryn Flynn
May 6, 2019
18 states offer 529 plan options that are insured by the Federal Deposit Insurance Corporation (FDIC), including high yield savings accounts and bank certificates of deposit (CDs). FDIC-insured investments are suitable for families who want to preserve capital in their 529 plan without taking on excess risk.
What are FDIC-insured investments?
FDIC-insured investments are backed by the full faith and credit of the United States government up to certain limits in the event of a bank failure. This is an attractive feature for families with a short time horizon to invest. If a student is approaching college or has already started college, they can take advantage of the tax benefits and flexibility of a 529 plan without risking their principal investment. The same strategy works for families who use a 529 plan to pay for K-12 tuition.
FDIC-insured options within 529 plans are also a good option for families who are risk-averse. For example, parents and grandparents who witnessed their retirement accounts or other savings get wiped out by the Great Recession may be hesitant to leave their child’s education fund at the mercy of volatile stock and fixed-income markets.
The states listed in this table offer at least one FDIC-insured investment option within a 529 plan. Two additional 529 plans offer similar investment options that are not FDIC-insured:
- North Carolina’s National College Savings Program offers the Federally-Insured Deposit Account, which is insured by the National Credit Union Administration (NCUA)
- Wisconsin’s Edvest 529 plan also offers CD investment options, but they are not FDIC-insured
Below we see ONE example of what financial vehicles are now tied to receiving that FDIC FUND if the BANK FAILING has investors who will be PAID earliest. So, the individual bank depositor wanting that FDIC protection of $250,000 upon failure is now competing with DEATH ROTH IRAS-----handled by global HEDGE FUNDS AND MUNI-FUNDS.
So, an individual having a single ROTH IRA DEATH ACCOUNT---which is replacing ordinary LIFE INSURANCE----will be only ONE person receiving the FDIC funds from that FAILED BANK. These banks which fail can appear to be a small rural bank-----citizens in towns or counties see these banks as LOCAL-----yet the bank leaders have tied these assets to these global banking COMPLEX INSTRUMENTS------GLOBAL HEDGE FUND DEALS---GLOBAL MUNI-FUND DEALS------which will suck up all those FDIC insurance guarantees.
This is why when a bank fails -------FDIC will say that bank had an extreme DEBT TO ASSET RATIO FAILURE. This was the case for the examples of bank failures shared yesterday.
'Discover how the Federal Deposit Insurance Corporation (FDIC) protects certain individual retirement accounts, and whether traditional IRA and Roth IRAs are included in this protection'.
'About this website
Is My IRA or Roth IRA FDIC-Insured?
Discover how the Federal Deposit Insurance Corporation (FDIC) protects…
Discover how the Federal Deposit Insurance Corporation (FDIC) protects certain individual retirement accounts, and whether traditional IRA and Roth IRAs are included in this protection'.
This same TIER SCHEME killing local bank depositors also kills those in ROTH IRAS------because a failed bank with these ROTH IRAS will not have enough FDIC to cover even those ROTH IRA HOLDERS----so those DEATH INSURANCE holders will be LOSERS AS WELL. ONLY the TOP TIER of these COMPLEX FINANCIAL INSTRUMENTS will receive those FDIC -----SCARCE FUNDS.
HOW DOES ONE EXCEED FDIC $250,000 limit on payout? There is a complex financial instrument to allow you to beat everyone else to that FDIC BAILOUT MONEY.
All this is what we call global banking 1% POLE DANCING---only now that POLE is being coated with more and more GREASE-----very slippery slope to becoming that WINNER.
Those ordinary bank depositors who will be LOSERS-----well, they are 'THEM' and not 'US'-----
Payable on Death Accounts Can Increase FDIC Insurance
There is a simple method for increasing the $250,000 FDIC coverage limit
By Joshua Kennon
Updated February 02, 2020
The FDIC maintains a $250,000 coverage limit on deposits held at single financial institutions, which might leave wealthier retirees in a bind when trying to protect their assets. That $250,000 limit includes every account--savings accounts, checking accounts, certificates of deposit, and money market accounts (which are different from the non-FDIC insured money market mutual funds).
However, there is one easy-to-use trick available to increase your total coverage limits to at least $1,250,000—the "payable on death" designation.
Payable on Death
Defined In essence, when you designate a bank account as payable on death, the person whom you've named is not entitled to any of the money until you pass away. When you do, however, they suddenly become the owner of the account. It bypasses your estate and is even more powerful than your last will and testament.
It is a type of revocable trust in that there is someone else who has a beneficiary interest in the account. That is the reason that these types of accounts are often referred to as the "poor man's trust fund." For virtually no paperwork or cost, they achieve many of the same net effects as a basic trust fund. The assets in the account get to skip probate entirely.
Because of that beneficiary interest, the FDIC currently allows you to cover as much as $1,250,000 at a single financial institution by designating up to five payable on death beneficiaries, none of whom can be covered for more than $250,000. An illustration might help you understand the basic mechanics of the strategy.
How You Increase Your FDIC Coverage Limits
Imagine that you are a doctor, and you have five grandchildren. You want to keep all of your money in a single bank, and want to sleep well at night knowing you are covered by FDIC limits. You don't want to deal with parking your money in Treasury bills, bonds, or notes.
Instead of dumping $1,250,000 into a checking account or savings account, you would, instead, do something like this:
- $250,000 certificate of deposit, designated payable on death to Jane Smith
- $250,000 checking account, payable on death to Andrew Smith
- $250,000 savings account, payable on death to Gregory Smith
- $250,000 money market account, payable on death to Elizabeth Smith
- $250,000 savings account, payable on death to Heather Smith
By doing this, if the bank were to fail in a catastrophic collapse, the FDIC would come in and restore the entire $1,250,000—five times the ordinary coverage limits. To test if you are doing it correctly, take a moment to play around with the FDIC EDIE calculator (Electronic Deposit Insurance Estimator), which will let you run scenarios to see if you are protecting your assets by showing how much cash you would recover in a bank closing.
A Handful of Drawbacks to Payable on Death Accounts
As with all things in life, there are some drawbacks to using the payable on death designation to increase your FDIC insurance limits on things such as savings accounts or certificates of deposit. Many states around the country have specific laws on the process that must be followed if you change your mind and want to change the designated beneficiary on a payable on death account.
In other parts of the country, people might give you an odd look if you request such an account. Instead, you may have to tell them you want a Totten Trust.
Just remember: You cannot override your payable on death instructions, which are a type of revocable living trust, with a will. If you name your son as the beneficiary on the account form, and then later leave the money to your daughter in your will, your daughter is going to receive nothing.1
Payable on death accounts/Totten trusts are revocable living trusts that become irrevocable once you pass away.
She has practically no recourse and the son isn't required to honor your last will and testament at all. The money is legally and lawfully his to do with as he pleases because the moment you passed away, the account became his personal property.
You should be confident that the recipient of the payable on death account is able to responsibly receive the money because if anything happens to you, that is exactly what will occur. You also have to contend with the fact that the money will be unrestricted. If you're concerned about the habits of your beneficiary, consider a spendthrift trust fund instead.
'foster greater innovation by financial institutions'.
AKA-----MORE COMPLEX FINANCIAL INSTRUMENTS ----that constantly bring BOOM AND BUST ------
The US FDIC fund is not very large--------much small today then decades ago. What this deregulation of FDIC insurance does is assure if there is bank failure that these financial products and their clients get those limited FDIC funds first---to the depletion of ordinary saving account consumers. Ergo, if a person has 500,000 in a saving and the bank fails ---that bank may say---sorry, but all 500,000 is lost because FDIC FUNDS are depleted.
These FDIC REFORMS come as the 2008 economic crash leading to massive bank failures cleaned out all of FDIC FUNDS-----this agency is depleted. So, this coming RECESSION ---BUST----will take many more banks to failure then last time-----with DEPLETED FDIC funds---so, who as a DEPOSITOR of any bank will be BAILED OUT with FDIC $250,000 guarantee protection?
GLOBAL HEDGE FUNDS/GLOBAL MUNI-FUNDS-----but not 99% WE THE PEOPLE black, white, or brown bank depositors.
FDIC created during FDR NEW DEAL to protect banks from ROBBER BARON sacking and looting-----work fine until these few decades of ROBBER BARON return. But, global banking 1% say -----WE NEED TO FIX FDIC.
'Of the existing agencies, changes are proposed, ranging from new powers to the transfer of powers in an effort to enhance the regulatory system. The institutions affected by these changes include most of the regulatory agencies currently involved in monitoring the financial system (Federal Deposit Insurance Corporation (FDIC), U.S. Securities and Exchange Commission (SEC), Office of the Comptroller of the Currency (OCC), Federal Reserve (the "Fed"), the Securities Investor Protection Corporation (SIPC), etc.), and the final elimination of the Office of Thrift Supervision (further described in Title III—Transfer of Powers to the Comptroller, the FDIC, and the FED)'.
'Special Considerations for MMDAs
Mutual Fund Liquidity Fees and Gates
In October 2016, the U.S. Securities and Exchange Commission enacted special rules for money market mutual funds that include the ability for funds to impose liquidity fees and gates in times of financial stress.
This means you could be charged a special redemption fee to cash out part or all of your fund, or the fund could impose a halt to redemption for a set period. These special rules do not apply to money market deposit accounts'.
FDIC Issues Proposal to Reform Brokered Deposit Regulations
on December 12, 2019 Newsbytes, Policy
The FDIC today issued a long-awaited proposal to modernize the existing brokered deposit rules and foster greater innovation by financial institutions. The proposal would clarify the definition of “deposit broker” to more accurately reflect the industry today and take into account the vast number of technological advances that have changed how banks take deposits. It would also establish an application and reporting process for depository institutions wishing to utilize the rule’s “primary purpose exception.”
The American Bankers Association has long called for an update to the brokered deposit rules, and pointed out in previous comments that under the current rules—which have not been updated for almost three decades--many entities such as social media platforms, fintech partners and bank subsidiaries could all be considered deposit brokers.
ABA President and CEO Rob Nichols applauded the move. “The rules in place today are holding back innovation, and we believe they need to take into account the new tools customers now use to interact with their bank,” he said. Comments on the proposal are due 60 days after publication in the Federal Register. ABA is carefully reviewing the proposal and will submit comments.
We are not experts on global finance DERIVATIVE COMPLEX INSTRUMENTS but we have spoken since the last economic crash from these 'innovative instruments'----that they are rigged by TIERS----killing UNIFORMITY of consequences -------and creating TOP TIER WINNERS. This is what yesterday showed where the people ROBBING those failed banks ran away with the money. Those 5% freemason/Greek players getting a few million while global banking 1% got the bulk-----
The change is this: where 99% of WE THE DEPOSITORS these few decades did receive FDIC coverage ------these reforms make sure these bank bailouts have all FDIC FUNDS going to the TOP TIER----the richest and allowing failed banks to say to DEPOSITORS----
SORRY, NO FDIC FUNDS AVAILABLE---NO FDIC BAILOUT FOR YOU.
We were already facing this with BOOM BUST depletion of PENSIONS/401Ks -------where TOP TIER HEDGE FUND/MUNI FUND insured would get most of the value from these PENSIONS/401Ks. Now, these reforms do the same with FDIC------FEDERAL INSURANCE OF BANK DEPOSITS.
That is what is HIDDEN in all of the public policy written below.
'Wall Street And The Financialization Of The Economy
www.forbes.com/sites/mikecollins/2015/02/04/wall... Feb 04, 2015 ·
A new word has emerged in the lexicon of the new economy - financialization- defined as the “growing scale and profitability of the finance sector at the expense of the rest of the economy and the shrinking regulation of its rules and returns.” The success or failure of the financial sector has had serious effect on the rest of the economy and most ...'
FDIC and Financial Regulatory Reform
FDIC’s Role and Authorities under the New Financial Reform Law
What are the FDIC’s primary new responsibilities under the new law?
Expanded Receivership Authorities
The new law gives the FDIC broad authority to use receivership powers to liquidate failing systemic financial firms in an orderly manner. These powers are similar to those the FDIC has long used to resolve failed insured depository institutions.
The FDIC’s new authorities also include conducting a claims process and paying claims, establishing bridge financial companies to facilitate orderly wind-downs of failed systemic financial firms, and transferring qualified financial contracts to bridge companies or third parties.
The decision to deem a failing financial firm “systemic” (and thus subject to FDIC receivership) will generally be made by the FDIC and Federal Reserve Board, in conjunction with a determination by the Secretary of the Treasury (in consultation with the President).
If the failing financial company is a broker-dealer or its largest subsidiary is a broker-dealer, the SEC (instead of the FDIC) would help make the systemic determination, and the FDIC would be consulted.
Similarly, the Director of the new Federal Insurance Office would help make the systemic determination, if the failing financial company is an insurance company or its largest subsidiary is an insurance company, and the FDIC would be consulted.
Once a systemic determination is made, the FDIC would be appointed the receiver for the failed financial company
If the financial company to be liquidated is an insurance company, the state regulator is charged with resolving the company under applicable state law. Only if the state regulator does not act within 60 days would the FDIC step in, and even then would act under state law. For registered broker-dealers with Securities Investor Protection Corp. insurance, the new law includes specific provisions governing the coordination of those resolutions between the FDIC and SIPC.
The law requires systemic nonbank financial companies and large bank holding companies (those with at least $50 billion in assets) to submit to the FDIC, Federal Reserve, and Financial Stability Oversight Council a plan for their rapid and orderly resolution in the event of severe financial distress or failure – otherwise known as a “Living Will.” Jointly with the Federal Reserve Board, the FDIC will issue regulations on the development of “living wills” for the systemic nonbank financial companies and large bank holding companies, review the plans when submitted, and decide whether the plans are adequate. If they are not, then the FDIC and Federal Reserve Board can require changes, impose more stringent requirements or restrictions, and ultimately require the firms to sell operations or assets to reduce the risks they pose to the system.
Strengthened Back-Up Authority
The new law gives the FDIC back-up examination authority for systemic nonbank financial companies and bank holding companies with at least $50 billion in assets if the FDIC Board determines examination is necessary to implement the FDIC’s authority to provide for orderly liquidation of the company.
This authority may not be used if the company is in generally sound condition;
The FDIC must first review the company’s resolution plan and available examination reports; and
The FDIC must coordinate with the Federal Reserve Board to minimize duplicative examinations.
The law also authorizes the FDIC to bring back-up enforcement actions against depository institution holding companies if the conduct or threatened conduct of a depository institution holding company poses a foreseeable and material risk of loss to the Deposit Insurance Fund.
Deposit Insurance Fund
The new law makes positive changes in the FDIC’s authorities to manage the Deposit Insurance Fund in order to have increased resources on hand in the future. It also makes permanent the increase in deposit insurance to $250,000, and makes the increase retroactive to January 1, 2008. It extends the Transaction Account Guarantee program for 2 years from December 31, 2010 to the end of 2012.
What different types of companies will the FDIC now have the power to resolve?
The FDIC will now have the authority to resolve financial companies whose failure would pose a systemic risk to the financial stability of the United States. These companies include bank holding companies and nonbank financial companies such as securities brokers and dealers, and hedge funds. To resolve brokers and dealers, the FDIC would coordinate its efforts with the Securities Investor Protection Corporation (“SIPC”). Where insurance companies are concerned, the company would be resolved under state law, but the FDIC would step in to handle that resolution if the appropriate state authority did not take the necessary action.
Is the FDIC prepared to handle its new responsibilities?
The FDIC is keenly aware that having a credible systemic resolution authority in place and being ready to act is critical to promoting financial stability and ending too big to fail. If another financial crisis occurs, we will be ready to put our systemic resolution authority to work as Congress intended. We are working rapidly and systematically to implement our new systemic resolution and supervisory responsibilities.
The FDIC also will:
actively participate as a member of the Financial Stability Oversight Council;
take on staff and responsibilities from the OTS in connection with our new supervisory responsibilities for state chartered thrifts;
write or update key rules and regulations;
prepare or contribute to several studies; and
coordinate much of this effort with other financial regulatory agencies.
What are some of the rules the FDIC will be involved in writing?
Some of the most significant relate to:
the new living wills requirement;
implementation of Senator Collins’ capital floor requirement;
implementation of the orderly liquidation authority;
implementation of the Volcker rule following the Council study;
source of strength requirements for bank and thrift holding companies; and
credit risk retention requirements for securitizations.
We'll also update our deposit insurance coverage and assessment regulations to reflect changes made by the legislation.
List of studies and reports FDIC will produce
Consult with the Comptroller General on a GAO study of person-to-person lending;
Conduct a study of core and brokered deposits to evaluate the effect on the Deposit Insurance Fund and on local economies of redefining core deposits, and report to Congress;
Conduct a study with the Comptroller of the Currency and submit a report to Congress on employees transferred from OTS;
Review and report, with the other Federal banking agencies, on the investment activities of insured depository institutions and bank holding companies under current law and agency interpretations;
Review any regulation that relies upon rating agency assessments of credit-worthiness, remove such references, and report to Congress on the modifications;
Consult with the Comptroller General on a GAO study of hybrid capital instruments as a component of Tier 1 capital;
Consult with the Comptroller General on a GAO study of capital requirements for intermediate holding companies of foreign banks; and
Coordinate with other agencies and the Federal Reserve Board on a study of the effect new risk retention requirements and accounting rules have on asset-backed securities.
How will the Deposit Insurance Fund reserve ratio be affected by the new law?
What will it mean for bank assessments?
The new law has enhanced the ability to manage the Deposit Insurance Fund (DIF). The FDIC has developed a comprehensive, long-range management plan for the DIF designed to achieve moderate, steady assessment rates throughout economic and credit cycles while also maintaining a positive fund balance even during a banking crisis.
The FDIC adopted a new Restoration Plan to ensure that the reserve ratio reaches 1.35 percent by September 30, 2020, as required by the new law. Because of lower expected losses over the next five years, the FDIC elected to forego the uniform 3 basis point increase in assessment rates that was scheduled to go into effect on January 1, 2011.
The new law requires that the FDIC offset the effect of increasing the reserve ratio from 1.15 percent to 1.35 percent on small insured depository institutions (those with assets of less than $10 billion). The FDIC anticipates going through notice and comment rulemaking in 2011 to determine how to structure the required offset.
The FDIC undertook a historical analysis of losses that suggests that a reserve ratio of at least 2 percent increases the chances of maintaining stable assessment rates and a positive fund balance during a crisis. The FDIC has proposed setting the designated reserve ratio at 2 percent, which the FDIC views as a long-term, minimum goal.
The FDIC has also proposed:
(1) a lower rate schedule when the reserve ratio reaches 1.15 percent, and (2) in lieu of dividends, successively lower rate schedules when the reserve ratio reaches 2 percent and 2.5 percent.
The new law requires that the FDIC amend its regulations to redefine the deposit insurance assessment base from adjusted domestic deposits to average consolidated total assets minus average tangible equity.
Since the new assessment base will be much larger than the current base, the FDIC is proposing to lower assessment rates effective April 1, 2011, which achieves the goal of creating a new assessment system that does not significantly alter total revenue collected from the industry.
What do new capital requirements mean for the stability of the banking industry?
The new law increases capital requirements for bank holding companies and systemic non-bank financial companies. These requirements will help reduce leverage (the amount of debt these companies hold) and provide a more stable financial system in the future.
For the first time, bank holding companies will be subject to the same standards as insured banks for Tier 1 capital.
These requirements help ensure that bank holding companies will serve as a source of strength to their subsidiary banks rather than as a source of weakness, as we saw too often during the recent financial crisis.
In general, why is capital so important -- not only to the health of banks but also to strengthening the economy?
Just like the prudent consumer who puts money away for a rainy day, so too must the prudent banker. Capital is the cash a company has on hand -- the equivalent of a household’s savings account. It lends essential stability to individual institutions and to our banking system as a whole.
Well-capitalized banks can survive and even prosper in uncertain times, and can serve as the indispensable source of credit for economic recovery.
The recent financial crisis had its roots in excessive leverage, both on the balance sheet and through off-balance-sheet positions.
At the margin, equity may be more costly than deposits or debt as a means to fund the bank balance sheet.
But the costs of inadequate capital – to banks themselves and to our economy – have proven to be much higher.
Will the FDIC lose authority on consumer compliance to the new Consumer Financial Protection Bureau?
No. In fact, the new Consumer Financial Protection Bureau (CFPB) will complement and bolster the FDIC’s efforts to ensure that consumers are treated fairly when obtaining financial products and services. And the FDIC will continue to need and staff a robust consumer protection and supervision function to meet our consumer protection and safety and soundness missions.
The FDIC will keep all of its compliance examination and enforcement authority for FDIC-regulated institutions with $10 billion or less of assets (which is the vast majority of banks the FDIC supervises). The CFPB will take on compliance examination and enforcement for FDIC-supervised banks that are larger than $10 billion in assets and a number of significant non-bank firms that provide financial products. The FDIC currently supervises 21 banks over $10 billion, plus a total of 24 affiliates, which would move under the CFPB for compliance purposes. However, the FDIC retains back-up enforcement authority for these institutions.
The law requires the CFPB to coordinate its large bank examination activities with the safety and soundness reviews by the FDIC and the other primary federal regulators.
The rulemaking authority for consumer financial protection laws (including Truth in Lending, Truth in Savings, Electronic Fund Transfer, HOEPA, etc.) will transfer to the CFPB, mostly from the Federal Reserve Board. An important difference is that, unlike in most Federal Reserve rulemakings today, the CFPB is required to consult with the FDIC and the other prudential regulators when writing these rules.
Under the new law, the FDIC retains its existing authority in the area of deposit insurance, including the financial education aspects of deposit insurance. In addition, the FDIC and other banking agencies keep their responsibilities for the Community Reinvestment Act and Fair Housing Act.
The new CFPB is directed to route certain consumer complaints to the appropriate agency for prompt resolution, so the FDIC will continue to handle these complaints.
Will the new law end the funding subsidy for big banks?
If properly implemented, the reforms should help level the competitive playing field between large and small banks.
Small institutions rely heavily on deposit funding, and the increase in the deposit insurance limit to $250,000 has already enhanced their competitive position and capacity to lend.
Ending the idea that some firms are “too big to fail” and arriving at a stronger and more uniform set of capital requirements are the other necessary elements to leveling the playing field. The new law creates the tools, and now it is up to the regulators to put them into practice.
Will these new tools really help prevent, or at least mitigate, a future crisis?
No set of laws, no matter how enlightened, can forestall the emergence of some new financial crisis somewhere down the road. It is part of the nature of financial markets, observed throughout history.
However, this law will help limit the ability of financial institutions to take risks that put our economy at risk, and will give regulators the tools to contain the fallout from financial failures so that we will not have to resort to a taxpayer bailout during the next period of financial distress.
Properly implemented, these measures will require financial institutions to bear more of the risks that they impose on the financial system, and leave taxpayers and more responsible institutions bearing less of the risk.
Will the new regulations stifle lending?
There is no question that lending has been very sluggish thus far in the financial cleanup, which is posing problems for households and businesses as they are trying to get back on their feet.
Our goal going forward should be to strengthen financial practices at every stage of the business cycle, which would go a long way toward making financial regulation less pro-cyclical in the future.
Strengthening financial practices will result in stronger financial institutions that can be a more consistent, prudent, and stable source of lending for our economy.
FDIC has been placed into the same system as COMPLEX FINANCIAL INSTRUMENTS------and TRANCHES will determine who gets how much FDIC money-----and TRANCHES always are written to make sure the richest get ALMOST ALL of those funds. So, instead of our US 99% WE THE BANK DEPOSITORS feeling assured to receive FDIC BAILOUT-------those bank robbers working for global banking SHELL COMPANIES ----will getting all those FEDERAL FUNDS.
We discussed often these few decades how PENSION FUNDS----401K wealth accumulation for MAIN STREET was lost every BUST OF A BOOM CYCLE------the 99% are earning very little on investments-----not even the accumulation of simple SAVINGS ACCOUNTS interest rates.
MOVING FORWARD to these next series of bank failures ----and these TRANCHES will take all the FDIC FUNDING ----while ordinary bank consumers are told----SORRY, NOT BAILOUT FOR YOU-----your money is GONE.
The Obama/Clinton neo-liberals made it easier for global banking to take yet more FEDERAL FUNDS aimed at protecting average citizens.
By James Chen
Updated Apr 27, 2019
What Are Tranches?
Tranches are pieces of a pooled collection of securities, usually debt instruments, that are split up by risk or other characteristics in order to be marketable to different investors. Each portion, or tranche, is one of several related securities offered at the same time but with varying risks, rewards and maturities to appeal to a diverse range of investors.
The Basics of Tranches
Tranches in structured finance are a fairly recent development, spurred by the increased use of securitization to divide up sometimes-risky financial products with steady cash flows to then sell these divisions to other investors. The word "tranche" comes from the French word for slice. The discrete tranches of a larger asset pool are usually defined in transaction documentation and assigned different classes of notes, each with a different bond credit rating.
Senior tranches typically contain assets with higher credit ratings than junior tranches. The senior tranches have first lien on the assets—they're in line to be repaid first, in case of default. Junior tranches have a second lien or no lien at all.
ABOVE WE SEE THOSE 'TIERS' OF PEOPLE RECEIVING FDIC FUNDING FIRST. TOP TIER WILL GET THE BULK OF FDIC FUNDS---SOME JUNIOR-----THEN ORDINARY BANK DEPOSITORS WILL GET NONE.
Examples of financial products that can be divided into tranches include bonds, loans, insurance policies, mortgages, and other debts.
Tranches are pieces of a pooled collection of securities, usually debt instruments, that are split up by risk or other characteristics in order to be marketable to different investors.
Tranches carry different maturities, yields, and degrees of risk—and privileges in repayment in case of default.
Tranches are common in products like CDOs and CMOs.
Tranches in Mortgage-Backed Securities
A tranche is a common financial structure for securitized debt products, such as a collateralized debt obligation (CDO), which pools together a collection of cash flow-generating assets—such as mortgages, bonds, and loans—or a mortgage-backed security (MBS). An MBS is made of multiple mortgage pools that have a wide variety of loans, from safe loans with lower interest rates to risky loans with higher rates. Each specific mortgage pool has its own time to maturity, which factors into the risk and reward benefits. Therefore, tranches are made to divide up the different mortgage profiles into slices that have financial terms suitable for specific investors.
For example, a collateralized mortgage obligation (CMO) offering a partitioned mortgage-backed securities portfolio might have mortgage tranches with one-year, two-year, five-year and 20-year maturities, all with varying yields. If an investor wants to invest in mortgage-backed securities, he can choose the tranche type most applicable to his appetite for return and his aversion to risk.
Investors receive monthly cash flow based on the MBS tranche in which they invested. They can either try to sell it and make a quick profit or hold onto it and realize small but long-term gains in the form of interest payments. These monthly payments are bits and pieces of all the interest payments made by homeowners whose mortgage is included in a specific MBS.
Investment Strategy in Choosing Tranches
Investors who desire to have long-term steady cash flow will invest in tranches with a longer time to maturity. Investors who need a more immediate but a more lucrative income stream will invest in tranches with less time to maturity.
All tranches, regardless of interest and maturity, allow investors to customize investment strategies to their specific needs. Conversely, tranches help banks and other financial institutions attract investors across many different profile types.
Tranches add to the complexity of debt investing and sometimes pose a problem to uninformed investors, who run the risk of choosing a tranches unsuitable to their investment goals.
Tranches can also be miscategorized by credit rating agencies. If they are given a higher rating than deserved, it can cause investors to be exposed to riskier assets than they intended to be. Such mislabeling played a part in the mortgage meltdown of 2007 and subsequent financial crisis: Tranches containing junk bonds or sub-prime mortgages—below-investment-grade assets—were labeled AAA or the equivalent, either through incompetence, carelessness, or (as some charged) outright corruption on the agencies' part.
Real-World Example of Tranches
After the financial crisis of 2007-09, an explosion of lawsuits occurred against issuers of CMOs, CDOs and other debt securities—and among investors in the products themselves, all of which was dubbed "tranche warfare" in the press. An April 14, 2008, story in the Financial Times noted that investors in the senior tranches of failed CDOs were taking advantage of their priority status to seize control of assets and cut off payments to other debt-holders. CDO trustees, like Deutsche Bank and Wells Fargo were filing suits to ensure all tranche investors continued to receive funds.
And in 2009, the manager of Greenwich, Conn.-based hedge fund Carrington Investment Partners filed a lawsuit against the mortgage-servicing company American Home Mortgage Servicing, Inc. The hedge fund owned junior tranches of the mortgage-backed securities that contained loans made on foreclosed that American Home was selling for (allegedly) low prices—thus crippling the tranche's yield. Carrington argued in the complaint that its interests as a junior tranche-holder were in line with those of the senior tranche-holders.
Here are those global banking 1% corporations controlling almost all ROTH IRAS--------investing these funds in small and regional banks which easily fail during ECONOMIC BUSTS AND RECESSIONS. The number of people in these investment TRANCHES tied to ROTH IRA for example is large--------each one in that ROTH IRA investment vehicle will get that FAILED BANK'S FDIC money before local depositors. Because the number of ROTH IRA HOLDERS is growing and growing and growing------many of those ROTH IRA HOLDERS will not get FDIC PROTECTION.
As we say over and over the tranche system makes sure only that TOP TIER of tranche holder get those FEDERAL FUNDS----- this is why main street lost big time over WALL STREET in 2008 economic crash.
FDIC UNIFORMITY PROTECTED EACH BANK DEPOSITOR FROM BANK FAILURE-----OBAMA AND CLINTON NEO-LIBERALS REFORMED FDIC POLICIES TO MAKE SURE ONLY THE RICHEST GET THOSE FDIC FUNDS.
Best Roth IRA Account Providers of 2019
Tuesday, August 27, 2019
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
Jamie Cattanach Roth individual retirement accounts (IRAs) are a powerful vehicle for retirement savings.
That’s because in a Roth IRAs your money grows tax free. Here’s how it works: You deposit money into your Roth IRA on which you’ve already paid income taxes, you earn interest on those funds over the life of the account and withdrawals are not taxed as income — unlike withdrawals from traditional IRAs. There are other benefits of a Roth IRA: No required distributions, unlimited deposits for qualifying individuals, and lenient early withdrawal rules.
OUR SOCIAL SECURITY AND MEDICARE USED TO BE THAT WELL-PLANNED RETIREMENT STRATEGY----AND PENSIONS.
For many investors, Roth IRAs are an important component of a well-planned retirement strategy. But where should you open your Roth IRA? There’s no shortage of brokerages that want your retirement dollars, and this embarrassment of riches can make deciding difficult. We have surveyed the field of options and narrowed the list to the best Roth IRA accounts for both active investors and more hands-off savers. Read on for our review.
How we chose the best IRA account providers
To arrive at our list of the best Roth IRA accounts, we thoroughly reviewed the broker and robo-advisor landscape. In our latest round of research, we evaluated 39 different product offerings. For each product we collect dozens of different data points from fees, to portfolio construction, customer service, research offerings, account minimums and firm reputation.
For our rankings for the best Roth IRAs for active investors, the most important criteria were trading fees, account minimum, the diversity of investment products offered (stocks, bonds, ETFs and mutual funds) and low account fees (yearly fees, transfer fees and inactivity fees).
For our rankings for the best Roth IRAs for hands-off investors, the most important criteria were management fees and account minimums and considered ease of use and customer support. See our methodology article for more details on how we created our rankings.
Best Roth IRAs for hands-off investors
Many folks do not have the time, interest, or expertise to invest their money themselves. The great news is that you actually don’t have to. You can hire a robo-advisor to do the job for you. For a competitive annual management fee plus the expenses of the selected funds — usually totalling 0.35% to 0.50% of your portfolio per year — a robo-advisor will invest your money in a portfolio tailored to your financial goals. See below for our picks for best robo-advisors for Roth IRAs.
Annual Management FeeAverage Expense Ratio (moderate risk portfolio)Account Minimum to StartFidelity Go$0Close to 0.00%*$0
E-Trade Core Portfolios$0Close to 0.00%*$500
Ally Invest Managed Portfolios$00.08%$100*
Most of the Fidelity Go portfolios are composed of Fidelity Flex funds, which have 0.00% expense ratios. A small amount is held in the Fidelity Government Cash Reserves Fund, which does come with some expense charges. However, some of those fund expenses may be offset by a “variable fee credit”. See Fidelity’s FAQs for more.
Fidelity Go — Transparency and low costs
What you see is what you get with retirement powerhouse Fidelity’s robo-advisor Fidelity Go. Fidelity charges a 0.35 % annual management fee and close to 0% in expense ratio fees. Considering that almost all robo-advisors pass on to customers ETF expense ratio fees — they range from 0.08% to more than 0.15% a year — Fidelity helps you feel confident you’re lining your own pockets, not the fund manager’s. With no minimum account size and no fees to transfer money in or out of your account, it’s easy to get started whether you’re scraping together Washingtons or swimming in Benjamins. One note of caution: Fidelity Go does invest solely in Fidelity-owned funds, so if you are a conservative investor, you may want to consider also investing with a robo-advisor that spreads your investments across different fund companies.
Fidelity Go Highlights:
- Low fees: 0.35% management fee and almost 0.00% expense ratios. Fidelity invests most of your money in their proprietary Fidelity Flex funds, which have 0% expense ratios and are only available to select customers. The company also provides rebates to offset the fees they charge to hold other funds.
- Size and experience: Fidelity is one of the biggest retirement brokerages in the US. The firm manages money for over 30 million customers, so your investment will be in very experienced hands.
- Both human- and robot-managed funds. The funds in Fidelity Go portfolios are a blend of actively managed and passively managed funds, so you get the advantages of both investing approaches.
You may know E-Trade from their talking baby commercials, however robo-advisor Core Portfolios is more than just clever marketing. Low total fees — a 0.30% management fee and an average expense ratio of 0.06% — plus a low $500 minimum balance make it easy to start investing and keep investing with Core Portfolios. One aspect that sets E-Trade apart is their diversity of portfolio options. Investors can choose between three different portfolio sets: core portfolios, socially responsible portfolios, or smart beta portfolios, each of which includes a mix of equities designed to meet more tailored investing goals. One item to watch out for with E-Trade retirement accounts are penalty fees: They charge $25 for early IRA distributions, if you need to recharacterize an IRA contribution to a Roth IRA, or if you accidentally overfund your Roth IRA.
E-Trade Core Portfolios Highlights:
- E-Trade does not invest your dollars in their own proprietary funds, reducing potential conflicts of interest. Some investors prefer this approach, which is the opposite tack to the one taken by Fidelity, for example.
- Socially responsible investing (SRI) and smart beta portfolios provide options for investors who want to tailor their IRAs for specific goals. SRI strategies allow you to put your money to work with only vetted socially and environmentally responsible companies, while smart beta attempts to outperform more conventional funds with frequent reweighting of equity holdings.
- Low fees: 0.30% management fee and 0.06% avg expense ratio.
Wealthfront is one of the pioneers of the robo-advisor movement, and their continued commitment to ultra-low fees makes them an attractive place to grow your Roth IRA. The annual cost is a 0.25% annual advisory fee on investments management fee plus an average expense ratio of 0.07% to 0.16%, which is in line with other leading robo-advisors. If you’re looking for guidance, Wealthfront offers a suite of free tools to help you plan for retirement and other major financial life events. Since Wealthfront is all-digital, face-to-face interaction isn’t an option, which some folks may love — or dislike. If you want to shoot the breeze with your broker at their desk, other options may suit you better.
- Premium investment strategies available for investors with large accounts including Risk Parity for accounts over $100,000 and Smart Beta for accounts over $500,000.
- A minimum deposit of only $500 to open an account makes Wealthfront accessible for beginning investors.
- Free financial planning tools for retirement, college savings, college and time off for travel.
Like a trusted family member, Ally Invest Managed Portfolios will babysit your retirement savings so that you can go have more fun — it’s up to you whether that means hiking an extra mile in the woods or rehearsing your Elvis impression for karaoke. Ally’s robo-investing service offers ETF portfolios diversified across five different asset classes to give you the best chance at growth, while keeping fees to a minimum. Ally offers 24/7 support as well, which means that you’ll never be on your own if you have to sort out a complicated retirement question. One drawback with Ally is that, once you deposit money in a Roth IRA, they charge you fees if you try to transfer or close an account — $50 for a full or partial account transfer or $25 to close an IRA account.
Ally Invest Managed Portfolios Highlights:
- Low, $100 minimum deposit makes it easy to start investing for retirement.
- Automatic portfolio rebalancing adjusts for market swings, ensuring that your portfolio matches your priorities.
- Ally offers many services beyond Roth IRAs, including a savings account with a 1.60% APY, traditional brokerage accounts, CDs, and money market accounts.
Best Roth IRAs for active investors
The brokers below offer up a universe of retirement investing options for investors who are confident making more of their own investing decisions. If the idea of choosing the stocks, bonds and funds for your retirement sounds exciting – and you have the time to devote to it – a Roth IRA account with one of the brokers below will allow you to avoid management fees and keep more of your retirement dollars to yourself.
It is not by chance that Fidelity leads our rankings for Roth IRAs, both for active investors and hands-off investors. In terms of investing selection, Fidelity has very robust offerings for retirement investors, including over 3,600 no-transaction-fee mutual funds and over 500 commission-free ETFs. There is no minimum deposit to open an account, and while Fidelity’s $0.00 per trade fee is not the lowest in the industry, it is on the low end. Fidelity does not attempt to lock you in to their service, charging no fees to transfer funds or close your account. While their website and app may not have the bells and whistles of some of the newer brokerage startups, Fidelity remains a cornerstone for retirement investors with solid offerings and low fees.
- Low fees: Fidelity charges a $0.00 per trade commission and no fees to transfer funds or close accounts.
- Fidelity’s proprietary ZERO funds charge 0.00% in expense ratios: This means that every penny of growth stays right in your portfolio.
- Helpful retirement planning tools and dashboards: These tools help you build a retirement savings plan and stay on track.
The buddy system isn’t just for kids, it’s actually great for retirement planning. Charles Schwab stands out among its peers for IRA customer support, with a dedicated IRA phone line to help answer questions and free consultations with Schwab fixed income specialists, which is a great resource for investors close to retirement. The smorgasboard of investing options that Charles Schwab offers through its Roth IRAs should be enough to satisfy any retirement planner. It’s easy to start, with $0 minimum deposit to open an account, and $0.00 per trade commissions should keep your piggy bank intact. One caveat to keep in mind is Schwab’s transfer fees. It costs $25 to partially transfer an account to another brokerage and $50 to transfer an entire account.
Charles Schwab Highlights:
- Excellent customer service: Schwab offers a dedicated IRA phone line, 24/7 support and over 350 branch locations for in-person consultations.
- Strong low-fee investment selection: The firm gives investors access to over 500 commission-free ETFs and more than 3,400 no-transaction-fee mutual funds.
- A broad selection of educational resources: Schwab’s handy retirement calculators and investing educational resources help you make a retirement plan and keep the plan on track.
Opening a Roth IRA at E-Trade is simple with no minimum deposit required to start. Once you are in the door, low-cost choices abound: E-Trade offers over 4,200 no-transaction-fee mutual funds and over 270 commission-free ETFs, accompanied by planning tools and screeners to help you make the right selections for your retirement portfolio. The standard trading commission, $0.00 per trade, is on the high side, though this drops to $0.00 per trade when over 30 trades per quarter if you trade more than 30 times per quarter. Fees can sneak up on you if you are not careful, so keep an eye out. E-Trade charges a $25 penalty if you overfund an IRA, if you need to recharacterize an IRA contribution, or if you want to make early IRA withdrawals.
- Trading bonuses: Cash bonuses and 500 free trades available for new accounts with deposits of more than $25,000 within the first 60 days.
- Wide selection no-fee funds: E-Trade gives investors access to more than 4,200 no-transaction-fee mutual funds and over 270 commission-free ETFs.
- Powerful mobile trading apps: E-Trade gives you access to charting tools and research materials for when you’re on the go.
The smorgasboard of investing options at TD Ameritrade is enough to satisfy even the largest appetite for retirement investing. TD Ameritrade’s low-fee offerings are impressive with over 500 commission-free ETFs and over 3,900 no-transaction fee mutual funds. TD also provides free analyst reports, tools and watch lists in order to help you sift through these plentiful options. With retirement-specific fees TD Ameritrade generally scores well, with no fees for early withdrawals, over-contributing or recharacterizing IRA contributions. TD Ameritrade’s trading fees are on the high side at $0.00 per trade, so if you plan to trade a lot you may want to consider lower-cost brokers.
TD Ameritrade Highlights:
- Useful retirement planning resources: TD offers its users a plethora of retirement planning resources, including calculators, educational videos and webcasts.
- Trading bonuses for large accounts: The firm rewards investors with up to 500 free trades for the first 60 days and cash bonuses for deposits of $25,000 or more.
Individual retirement account FAQs
What is a Roth IRA?
A Roth IRA is an after-tax investment account, meaning you deposit dollars into your account on which you’ve already paid taxes. Your funds grow tax-free over the life of the account, and you receive qualified tax-free distributions in retirement. A big benefit is that there are no required minimum distributions (RMDs), meaning that you are not required to withdraw funds at age 70 ½. There are also no age restrictions for contributing to a Roth IRA, so as long as you have earned income you can contribute.
In order to make tax-free withdrawals, five taxable years must have elapsed since contributions were first made to the account, and one of the following secondary criteria must also be met:
- The account owner reaches age 59 ½.
- The account owner becomes disabled.
- The account owner meets the IRS’ first-time homebuyer qualifications.
- The account owner dies, and distributions are made to a beneficiary or the estate.
Roth IRAs are good vehicles for passing on tax-free assets to beneficiaries and heirs because they aren’t subject to required distributions, so they can grow until the account owner’s death.
What should I look for when comparing brokerages for Roth IRAs?
With a large number of brokers to choose from, you need to do research to ensure you choose the best Roth IRA account for your needs. Here are a few factors to compare during your search:
- Annual fees: Brokers assess an annual fee for Roth IRAs, often expressed as a percentage of the assets under management. Although this fee may be as low as 1% and may seem negligible, as your account grows, that small percentage can become quite a chunk of change. You can start your search by looking for accounts with the lowest annual fees possible. Some providers don’t charge any annual fees and instead make money from trades and commissions.
- Minimum initial funding: Does the Roth IRA provider require a certain minimum initial deposit to get started, and if so, can you afford it? If you have a decent stash of funds to invest, you also could look for bonuses and promotions, where the account provider gifts money or other perks when you meet a deposit minimum.
- Commissions and trading fees: Most Roth IRA custodians assess a commission for each trade you make, which means you’ll lose some money whenever you buy or sell assets. However, some brokerages also offer commission-free assets, such as ETFs and mutual funds. Choosing the right broker can help you minimize or entirely avoid these fees.
- Investor tools to help you make smart investing decisions: Although all investments carry some risk, some investment strategies are smarter than others. Many brokerage accounts offer research tools and access to live financial professionals to help you choose the best funds for your Roth IRA.
Should I get a Roth IRA or a traditional IRA?
Like everything to do with finances, it depends on your unique situation. Generally speaking, if you think you will be in a higher income tax bracket after you retire than before you retire, you’ll want to invest more in a Roth IRA, which allows you to withdraw earnings tax free. If you think you will be in a lower income tax bracket in retirement than before retirement, then you’ll want to have more invested in a traditional IRA.
Realistically, predicting your future income tax bracket can be like trying to predict the weather in Kansas City, Mo. four months from Tuesday: There are a lot of unknown factors. A hybrid approach, with money split between a Roth IRA and a traditional IRA, while also contributing to a 401(k), can be a good balance for many folks. It gets you the main benefits of a Roth IRA — tax-free growth, no required minimum distributions and more lenient early withdrawals — while also leaving open the benefits of a traditional IRA or 401(k) — an upfront tax deduction and tax-deferred growth.
What if I need to take money out of my Roth IRA?
If you watch enough heist movies you know that even best-laid schemes rarely go according to plan. Luckily, if life throws your grand financial plan off track and you need to withdraw money from your retirement savings, Roth IRAs offer flexibility. The principal — the money that you deposited into a Roth IRA account — is always yours to withdraw penalty-free. If you need to withdraw some of the interest earnings — the money earned from the principal — you will have to pay an additional 10% penalty to the IRS on earnings you withdraw before age 59 ½ or before the account is five years old. This 10% penalty is in addition to any taxes you have to pay on the withdrawal as normal income.
How long should I keep money in my Roth IRA?
As with any long-term investment, you should be comfortable salting away funds in a Roth IRA for at least five to eight years, and ideally until you are retired. Stock market fluctuations can cause investments to decline in down years, and a five-to-eight year time frame provides enough time for funds to recover in case of a drop, based on historical market cycles. If you are lucky enough to be able to retire, you’ll want to look at all of your retirement accounts and balance withdrawals from your Roth IRA with your other income strategies.
How much can I contribute to a Roth IRA?
For 2019, you can contribute up to $6,000 per year to your Roth IRA (or $7,000 if you’re 50 or older) as long as your income is not above the IRS limits. Don’t throw in the towel if your income is above the IRS cap, though. There are ways to roll money into a Roth IRA through a “backdoor IRA”, which entails opening up a Traditional IRA that you then convert to a Roth IRA.
What is a Roth 401(k)?
A Roth 401(k) is a type of retirement plan that many employers offer their workers. The main difference to a traditional 401(k) is that contributions are made using after-tax dollars, instead of pre-tax dollars. By using after-tax dollars, you can withdraw any interest earnings tax-free, come retirement time. A main benefit to Roth 401(k) accounts is that there are zero income caps, meaning that you can contribute money to a Roth 401(k) even if you make more than the income caps for a regular Roth IRA. One big difference to a Roth IRA is that you do have to start taking required minimum distributions starting at age 70 ½. Luckily, you can roll a Roth 401(k) over into a Roth IRA, which would help you avoid required minimum distributions.