I was showing my Dad my cell phone over the weekend. He said, “Son, no one gives a damn about all the things your cell phone does. You didn’t invent it, you just bought it. Anybody can do that.” Life with Dad, always an adventure…
Speaking of buying things, us taxpayers bought us another bank on Friday, although Central Bank of Stillwater, MN agreed to assume all of the failed bank’s deposits and all of its assets. Commerce Bank of Southwest Florida was taken over, and for those keeping a tally, it was #124 for this year and the 12th in Florida. They had total assets of about $80 million and total deposits of about $76.7 million, according to the FDIC. The FDIC and Central Bank will share in losses on about $61 million of Commerce Bank’s assets.
Do you have a 401(k) plan? It is the most popular retirement savings vehicle in the US, with about 65 million, or an estimated 40%, of private sector employees having one. It is named after the section of the IRS code, and came about in 1978 after Congress provided for taxpayers to receive a break on deferred income. In 1981 the IRS allowed employees to defer part of the pretax salary into their retirement plan. Most are offered at a lower cost than a traditional pension plan, and of course billions of dollars have moved from mattresses into the financial markets. But do they make investors smarter? Of course not – for better or worse, many companies encourage employees to use their 401(k) plans to invest in the company’s stock by offering discounts and other plans. Employees of companies like Enron, Countrywide, WorldCom, Lehman Brothers, Fannie Mae, Freddie Mac, etc. were encouraged to, in effect, double down instead of diversifying, not only relying on the company for employment but also hoping to rely on the stock during their retirement. So as we come up on the end of the year, and employees are realizing that they can put more money into their 401(k) plans, they should be careful where it goes.
But speaking of retirement plans, Flagstar requires evidence of liquidation when a borrower’s funds to close are coming from a “401(k), IRA or other acceptable retirement account, regardless of documentation required by Total Scorecard. Loans will not be cleared-to-close until acceptable evidence of liquidation is provided.