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Thread: For any of you that have online accounts with ING ...

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    Default For any of you that have online accounts with ING ...

    from

    (snip)But CEO Jan Hommen of ING Group made statements on Business News Radio () and Dutch public news radio Radio1 () this morning. I took the most telling quotes of these interviews:

    Hommen (translated and summarized from Dutch to English):

    “The profit of €1.7 bln is indeed large, but €560 mln of this were one-off book profits from the sale of company parts. If you deduct this, about €1.1 bln is remaining. Although the insurancy group is doing fine, the banking business is becoming less profitable.

    The financing costs are higher and there are additional expenses, due to new supervisor regulation. Also the customers changed their demand for products and services. These circumstances made lay-off in retail banking inevitable.

    ING made a substantial haircut of 60% on its Greek investments to the amount of €467 mln in Q3, maintaining a 40% valuation for the remaining Greek exposure for all maturing dates, inclusive 2020 and later.

    Trust in the international banking business is still very hard to find. Nevertheless we managed to completely fulfill our financing needs for 2011 and already partially for 2012.

    Although the authorities make it harder and harder to supply loans to private customers, we still managed in Q3 to supply €8 bln in credit and loans to private and corporate customers”.


    I understand Hommen and I understand his tough decision to lay-off 2700 jobs. The banking industry made an almost total change from ‘banking at the bank’ to ‘banking at home’ during the last decade. For 75% of bank services you don’t have to leave your home anymore.

    Now that the interest margins are decreasing and it is becoming tougher to supply loans to private and corporate customers, I think Hommen made the right decision to lay-off those people, no matter how hard this may seem.

    And although the exposure to Greece has been minimized by ING, I really doubt if this is true for the exposure to Spain and Italy. People should not forget that the exposure of the Dutch banks to Greece was ‘peanuts’, compared to the exposure to Italy (€8.8bln), Ireland (€26.5bln) and Spain (€24.6bln). And then don’t even mention France (€46.9bln) (snip)


    Not meaning to 'fear monger', but perhaps a reminder is in order that ING is indeed a Dutch bank ... with major exposure to PIIG debt ... that has zero physical bank branches in North America where you might walk in and withdraw your money !

    Yes, at the moment, ING accounts are accessible through certain North American ATM's. However, if 'trouble' were to start, that ATM access could be cut off in a millisecond.

    And yes, ING savings, checking and CD accounts for US customers are indeed insured by the FDIC. However, if 'trouble' were to start, it could take months or years before the FDIC actually makes good.


    Also, it's extremely coincidental that ING's 'distress' has hit the news at the same time as ...



    (snip)"CHICAGO -(Dow Jones)- If you've been thinking about firing your bank, now might be the time. A handful of grassroots groups are mobilizing people to abandon megabanks for what one organizer calls "more friendly" smaller banks and credit unions.

    Show time is Saturday, Nov. 5, dubbed "Bank Transfer Day" by its organizer, Kristen Christian, an art-gallery owner in California who started a Facebook movement after a handful of banks, most notably Bank of America (BAC), attempted to slap fees on debit-card use. Her movement has garnered support from consumer-advocacy groups and pressured big banks to kill debit-card fee plans.

    Meanwhile, an estimated 650,000 consumers have joined credit unions nationwide since Sept. 29, according to a statement on Thursday from the Credit Union National Association or CUNA, a credit-union advocacy group. That's the day Bank of America announced its debit-card fee.

    Credit unions saw savings-account deposits grow by $4.5 billion in that time, "likely from the new members and existing members shifting their funds," CUNA said.(snip)


    While the 'obvious' reason originally motivating 'Bank Transfer Day' dealt with the big banks imposing transaction fees and otherwise treating 'small time' customers ( i.e. < $20- $50,000 ) as 'disposable', there is also an unpublicized but increasingly important reason. With a regional bank or credit union, one can be reasonably confident that these local financial institutions are NOT mixed up in PIIG debt, CDO counterparty risk, 'musical money' ( a la MF Global's supposed accounts in European banks co-mingling investor funds ) etc.
    ~
    Last edited by Melonie; 11-05-2011 at 06:04 AM.

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    Default Re: For any of you that have online accounts with ING ...

    Sorry Im not very financially literate. What is the author saying exactly? That all ING customers close their accounts before the shit hits the fan?

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    Default Re: For any of you that have online accounts with ING ...

    ^^^ I made the original post before related issues like the MF Global bankruptcy hit the news. The basic points are that A. if ING gets tangled up in a Euro Bond default mess, it's a distinct possibility that ING's 'assets' may wind up being frozen until the authorities can sort out who owes who and how much money is actually available for payments. And B. like MF Global this could also result in the 'assets' of individual investors / depositors held by ING also being frozen while these matters are sorted out.

    Granted that certain types of ING accounts carry US FDIC deposit insurance. But actually receiving an insurance payout from the FDIC to cover ING deposits could take months or years.

    Thus I guess the point was that, if there is any overriding reason that an ING investor / depositor might need to access their money over the course of the next few months, transferring their money to a less 'controversial' financial institution might be worth considering.

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    Default Re: For any of you that have online accounts with ING ...

    Gaaaaah, now I don't know what to do! I may need to tap into my ING cash soon given issues with my employer that will require me to quit.

    But since this is news now, do you think that there might be many others going for a "run" on ING today which could also cause funds to take a while to move over.


    And I'll research this later, but do you know which USA banks with brick and mortar locations have decent savings rates for deposits around $10K? This is just for a savings account, which I need to have and maintain in something liquid like savings or money market. I do my checking through Chase, since they're everywhere, and last I checked, their rates were shit for depository accounts.

    Thanks!

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    Default Re: For any of you that have online accounts with ING ...

    well, where just about any US based bank is concerned, high interest rates are now apparently against government policy ... from

    (snip)"The American Bankers Association (ABA) has not been happy with Ally Bank. A few weeks ago, the organization on behalf of its member banks sent a letter to the Federal Deposit Insurance Corporation complaining about Ally’s interest rates. With Ally planning to receive bailout funds through its enrollment in the government’s Treasury Liquidity Guarantee Program (TLGP), the bank used the opportunity to offer higher interest rates on its savings, money market, and certificate of deposit accounts than its competitors.

    The letter from the ABA admonished the FDIC for allowing Ally Bank, formerly GMAC Bank, to offer the highest rates or rates among the highest in the country in order to seek more deposits and grow their business. It is unfortunate that the ABA should want to see banks lower interest rates on savings products and to let FDIC force them to do so. Millions of people rely on savings interest for living, and banks should want to encourage higher rates whenever possible.

    I do see where the ABA is coming from. Regulations such as interest rate limits, if imposed, should be imposed fairly to all banks. In any other situation, the ABA would be fighting regulation and be interested in competitive practices that allow the banks to set whatever rates they feel their business can handle.

    The FDIC responded to the ABA’s complaint by sending a letter to GMAC, Ally Bank’s parent company, warning the bank to “focus on reducing Ally Bank’s overall deposit costs,” where “deposit costs” is a term we would recognize better as “interest rates.” Even before GM’s bankruptcy and the rebranding of the bank from GMAC Bank to Ally Bank, the bank offered one of the highest interest rates available, but now the high rates are unacceptable to the government."(snip)


    ... so the odds of finding a brick and mortar US bank that is going to offer you more than 1% on a no strings savings account deposit is probably zero ( ALLY bank appears to be at 0.88% for new accounts ). On the other hand ING's Orange accounts are now down to 0.9%. Chase is below 0.5%. But on the other hand, every 1% in interest rate differential on a $10,000 account balance 'only' amounts to $100 per year pre-tax or $70 per year after tax. So from one viewpoint the question is whether or not the potential 'liquidity risk' of maintaining deposits in European banks, versus being able to walk into a brick and mortar US bank branch and walk out with cash, is worth $100 or whatever per year.

    As to a 'run' on ING bank or any other major european bank outside of Greece and Italy, nothing has crossed the news ticker that I know of. But then again we won't hear about MF Global-esque trillion dollar 'losses' until after the 'smart money' ( institutional investors, saudi oil sheiks, private banking millionaires etc. ) have already been given advance warning.

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    Default Re: For any of you that have online accounts with ING ...

    Ugh, you're right, now I'm in a quandry because I really like ING. And I already have enough money in various other institutions, I really like that ING isn't brick/mortar so its not as easy to withdraw my savings, and its (was?) highly reputable compared to some other banks (I've had my eye out on GMAC for a while.)

    I'll do a readup on my Morningstar account in the morning, nothing feels right anymore.

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    Default Re: For any of you that have online accounts with ING ...

    Do you realize ING Direct and ING are separate financial entities?

    ING Direct is having a black Friday sale, ends Sunday. People without checking accounts there can make an easy $107 in 50 days by opening one:

    http://www.ingdirect.com/blackfriday

    Other offers as well, for a total of $307, or $366 if you include your kids.

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    Default Re: For any of you that have online accounts with ING ...

    ^^^ ING Direct is the name given to the 'in-country' subdivision of ING Bank in countries like the USA, Australia etc. ING Bank has indeed attempted to sell off it's US ING Direct division ... but no 'greater fools' so far ( although credit card company Capital One has shown interest).



    I'll also add that having an ING Direct savings account backed by a Euro Bond loss ridden parent Dutch bank is actually more reassuring than having an ING Direct savings account backed up by a 'subprime credit card' loss ridden parent US financial institution !!!

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    Default Re: For any of you that have online accounts with ING ...

    I feel fucked, majorly adding to my stress, as I've recommended ING and Emmigrant as good non-fee, decent interest savings platforms for years. Now I don't know what to do, have an appointment with my financial advisor Thurs morning, who has many "Melonie" like recommendations, and also does his homework.

    Is the world collapsing?

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    Default Re: For any of you that have online accounts with ING ...

    ^^^ it's not that bad yet ! ( said hopefully, with one eye on overnight EuroZone bailout developments ).

    My own banking industry contacts essentially tell me that the problem boils down to undisclosed / mispriced risk, plus a slow realization that the supposed hedges / backstops against future loss - from derivatives counterparties to insurance companies to taxpayers - may not be able ( nor willing in the case of taxpayers ) to actually 'deliver' once losses start accumulating and payouts start being triggered.

    There are many financial institutions out there who really do not own a whole bunch of high risk assets, who are not 'on the hook' to counterparties etc. But with the gradual transition of EuroZone gov't bonds from safe investments towards total junk, ING bank definitely isn't one of them !

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    Default Re: For any of you that have online accounts with ING ...

    I met with my financial guy, next week I'll look for any deals my local credit unions are offering and/or might move my stuff over to EmigrantDirect.

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    Default Re: For any of you that have online accounts with ING ...

    Emigrant Bank is a very solid NY regional institution ... but you may not like knowing that the high interest savings / checking account interest payments they offer to online depositors are made possible by Emigrant immediately slapping 18% penalty interest rates on mortgaged homeowners after their first late monthly payment. As with most everything else, no pain no gain ... but in this case your gain is the result of Emigrant inflicting pain on someone else.

    Credit Unions usually achieve your gains via higher efficiency of operation / lower operating costs / lower loan loss risk etc. ... which really only inflicts 'pain' on the would-be 'subprime' borrowers whose loan applications get turned down. However, at the moment, previous large losses by a few very large credit unions are inflicting pain on ALL credit unions in the form of massively increased NCUA deposit insurance premiums. This is starting to push down the rates that credit unions can afford to pay out to depositors, and push up the rates that credit unions can afford to charge borrowers. Also, because virtually all credit unions are local in nature, their loss risk factors have traditionally been tied to the financial health of a particular local industry or local area economy. Thus a credit union based in Montana may be doing great, while a credit union based in Detroit may be experiencing deep distress.

    As to 'high interest' alternatives, ALLY Bank a.k.a. GMAC is still backed by 17 billion in 'free' US taxpayer TARP money, which provides them with an extremely 'low risk low cost' source of funding that virtually no other US banks can match. They are also very diligent about potential loss risk management lately, as shown by this news headline ... from

    (snip)GMAC Mortgage, one of the nation’s leading lenders, said yesterday that it will end most of its mortgage business in Massachusetts, a day after Attorney General Martha Coakley sued the company and four other major financial firms over their role in the foreclosure crisis.

    A spokeswoman for GMAC's parent, Ally Financial Inc., said GMAC will no longer buy loans that originated with other lenders and mortgage brokers in Massachusetts, but will honor all commitments made through Monday. She said GMAC will also continue to loan money to individual homeowners in the state, but that accounts for a small percentage of its business.

    "Recent developments have led mortgage lending in Massachusetts to no longer be viable when you add litigation costs," Ally’s Gina Proia said in an apparent reference to Coakley’s legal action.(snip)

    (snip)But local mortgage lenders and brokers said they are worried that the others will follow GMAC and also stop purchasing mortgages that originate with other lenders. That could limit consumers' borrowing options, they said, and put upward pressure on mortgage rates, which have been at historic lows.

    Elizabeth Phelan, chair of the Massachusetts Mortgage Bankers Association, said GMAC's diminished presence will have an "adverse impact" on borrowing. If other major lenders do the same thing, she said, "it would have a significant impact."(snip)


    The reason I posted this was to again illuminate the point that EVERY financial institution in today's world has an inherent loss risk component. However, since the establishment of FDIC and NCUA insurance funds, the American public has been 'sold' the notion that no bank can ever repeat the 1930's scenario of going bankrupt and failing to return ( 100% of ) depositors' money. In the USA at least, the FDIC has gone to great lengths to deal with actual bank failures in a way that was dollar neutral to depositors ( although the FDIC has now bankrupted its own insurance fund by doing so ). Thus if the 'whole truth' were known, systemic bank risk levels today are far higher than at any point since the 1930's. This isn't necessarily a problem in and of itself, at least through the current point in time where the US FED and US taxpayers provide an implied 'infinite backstop' for US banks and credit unions. The problem stems from the inability to determine the actual potential loss risks that exist for different financial institutions, as well as the fact that foreign based financial institutions may not have similar 'infinite backstops' stemming from foreign central banks and foreign taxpayers.

    ~
    Last edited by Melonie; 12-03-2011 at 09:09 PM.

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