counter on godaddy
post

Netbank: Online Banking goes Offline. Permanently.

If you think sub-prime mortgage defaults can’t effect you, think again. At first reading, I thought this was a bad joke:

The Office of Thrift Supervision closed down NetBank Inc. (NTBK) a thrift with $2.5 billion in assets, and appointed the Federal Deposit Insurance Corp. as receiver.

But it’s not a joke. The online bank I’ve been using for almost a decade is reduced to this:


On September 28, 2007, NetBank, Alpharetta, GA was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a business checking account, a Social Security direct deposit, and other relationships with the institution.

The NetBank web site will be closed from 3:00 pm to 8:00 pm EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.

To read more about this event please select the link below:

FDIC Bank Closing Information for NetBank

Frankly, under the circumstances I find the “Connect with your money” slogan rather comical. I guess fixing it is the last thing on their mind.

NetBank isn’t wasn’t some shaky Web 2.0 outfit, it’s been (well, appeared to) a solid bank for 10 years. They pioneered the concept of “brickless”, internet-only bank long before online transactions became the norm. I switched to them because at the time they were the only bank offering decent integration with both Quicken and Microsoft Money.

Now as a final act, they offer a once-in-a-lifetime experience: I’ve never seen a bank failure up close, personally. I guess I will soon (?) find out just “FDIC insured” means. I can’t even think of further implications now, but they can’t be good. We’re heading into shaky times.

Update: Peach Pundit wins the Best Title Award: NetBank becomes NotBank.

Update (9/29): Not everyone reads Friday afternoon news releases, but many do their online banking on the weekend. Or at least they try – now the Netbank failure is being noticed:

Comments

  1. Mark Robertson says:

    Yeow!

    My mom’s old age money is in NetBank (ING). Last year my wife got cancer and took an early retirement, and with little time between medical treatments moved through an extremely complicated cash-out and parked her retirement IRA at NetBank. The interest it accrued this last year takes her over the insured limit. We hadn’t thought about that.

    But enough about our Stupidity and Bad Luck.

    Lets look at this beast.

    Sub-prime lenders who are handing out 125% of value loans to people that don’t have to even prove their earnings, bundle those sketchy loans up and sell them to brokers via financial managers who tout them as investments.

    Everybody makes money. Everybody goes shopping. Patriotic.

    The bank makes money, the broker makes money, the financial manager makes money. The investors make money right up until the bad mortgage comes home to roost and then all their friends walk away, counting, while they weep.

    A Stop the Hemorrhage Measure?

    At this point the Office of Thrift Supervision steps in and closes down NetBank – a bank that wasn’t insolvent yet – to keep a bunch of under-regulated lenders from going broke domino fashion and dirtying the economic and political waters. My wife loses a years interest on her retirement IRA to pay for it.

    Does the Office of Thrift Supervision normally step in at this level of bank risk exposure – or is this a damage control exercise? Hmm?

    The Good Guys are being Punished, and the Bad Guys are getting Paid.

    Yeah chemo and xrays can make you dingy and we should have remembered to leave some umbrella to cover the interest, we’re just not used to having money. Or losing it to unethical institutions.

    Something is really very wrong here.

    We’re hoping the banking industry and FDIC are going to say “this is going to get really big and look really bad no matter how much we sit on the story and we should make sure that people in American that actually SAVED MONEY (gasp!) and trusted the electronic banking system get a fair shake in order to maintain consumer confidence and thus avert a run on the brickless and bricked banks alike…” Something like that. Huh? Guys?

    At this point, it won’t take much fear and doom – and then it won’t be “a once-in-a-lifetime experience.”

    m.robertson

  2. Thrifts and banks get taken over all the time, and arranged marriages are made, just like here. Usually they are small institutions and you don’t hear much about them because of their size.

    Your money is safe. The only time you have to worry is if your deposits exceed the FDIC guarantee amount, generally $100K.

    That’s why if you have more than $100K in deposits you should always divide them up among different FDIC insured institutions — or find a better investment for them.

    The really bad times were back in the late 1980s, early 1990s, when we had the so-called savings and loan crisis. Today is nothing compared to then.

  3. Miraclemant says:

    you think you have it bad with the Netbank failure, try living overseas and having to deal with opening a new account at a new bank. and now ING cancels all overdraft protection, and tells me they will no longer accept online payments for the previous overdraft. and now the tell me they are cancelling my ATM card (the only access I have to my funds overseas), and the icing on the cake is that all bill payments will cease as of Dec. 7th.
    ING Direct is non-service. they do NOT care about the Netbank customers.
    so I did some research, and found SalemFive Bank, founded in 1867, and they pay a whopping 4.7% on checking accounts, with no minimium balance required. so sign me up SalemFive Bank.

  4. neetugarg37 says:

    hi,my father's old age money is store in Net Bank (ING).that will help me for my higher study.I think in this my money is safe.The only time you have to worry is if your deposits exceed the FDIC guarantee amount, generally $100K.

    ———
    neetu
    ———
    MLS-MLS

Trackbacks

  1. [...] Netbank: Online Banking goes Offline. Permanently.Technorati Tags: netbank, online banking, quicken, ms money, microsoft money, bank failure, fdic, recession, mortgage, subprime mortgage, mortgage defaults, subprime defaults. Share This. [...]

Leave a Reply

%d bloggers like this: