Comments on: CD Ladders: Some Personal Experience

By: BMB

BMB — Sun, 12 Apr 2009 23:45:47 +0000

No doubt. I think ETrade lost more than a few customers in that debacle, including a few friends of ours.

By: Brad

Brad — Sun, 12 Apr 2009 16:17:26 +0000

@BMB:

My IndyMac CD had matured before most of the real issues came out. I also make sure to keep all the sums of my CDs under the FDIC limit and I have relative confidence in the FDIC. IF we get to the point where they’re defaulting we’re going to have a bigger set of issues.

The real concern was when ETrade’s solvency was in question with regard to my brokerage account. I was not nearly as confident in the security, and more importantly the “smoothness” with which any failure would be handled. The FDIC does a good job of making its takeovers relatively seamless, I don’t really have any similar knowledge about say SIPC insurance. Plus not having access to your brokerage account with all the insanity going on, even for a short period of time, could have been horrifying.

By: BMB

BMB — Sun, 12 Apr 2009 15:51:58 +0000

Good stuff Brad. Indeed, laddering CDs is a nice way to set up some regular income. But as you noted, it has become quite a bit more difficult due to the perversely low interest rate environment — not to mention the ‘fear factor’ when it comes to which financial institutions you can trust these days. If any.

I would think you’d have gotten a bit nervous with both GMAC and ETrade, didn’t you? And Indymac, that goes without saying…