Life after your bank fails

I don't normally double-dip and recycle my work writing on the blog, but right now the subjects I would have been covering here are being covered there, so I'm going to be lazy and link the piece I spent Friday pulling together: "Life after your bank fails"

Amusing factoid I couldn't fit into the already-long story: Chris Coulthrust, who had all of his business' funds at NetBank when it crashed, shares my deathtouch with banks. Like me, he left ING after it bought NetBank ... and moved his personal accounts to WaMu. We'll have to coordinate on what bank we want to kill off next.

Greetings, JPMorgan Chase overlords

Sigh. This feels so ... familiar. All I ask is one full year in which my accounts stay in the control of an actual bank, rather than the FDIC. One year. Is that so hard?

Avoiding a run on the bank

To clarify my post from Monday: I don't think the run-of-the-mill WaMu customer has anything to worry about, or should do anything in response to the bank's death spiral.

It seems fairly likely that WaMu will be acquired by another bank, rather than collapsing so thoroughly that it needs an FDIC takeover. Even if that worst-case-scenario came to pass, through, typical customers would barely notice.

When NetBank went bust in September, I never lost access to my money. I had a checking account at NetBank with a few hundred dollars in it. ATM access and debit-card use continued without any interruption; I could withdraw and spend money at all times. Checks I'd written both before and after the FSIC shutdown cleared just fine.

The only customer-facing service interruption was that the website went offline for two days, replaced by an FDIC shutdown notice. That notice specified the time period of the planned Web outage, and promised the site would be back up on Monday. You can see the notice in my post made at the time.

When a bank fails, the FDIC immediately posts a detailed FAQ for its customers. Here's Netbank's. Standard checking and savings accounts, like mine, have insurance up to $100,000; IRA funds have a separate, $250,000 insurance.

So, if WaMu went bust, anyone with less than $100,000 on deposit would be fully covered, and would almost certainly never lose access to their cash. The service interruptions, like the website going offline for two days, are blips, not catastrophes.

But WaMu insists it has the liquidity to stay in business (do they? we won't ever really know till it next reports earnings, crashes or gets bought), and reports keep coming in of behind-the-scenes scrambles to line up financing or a buyer.

This is annoying, because a new buyer usually brings new banking terms -- but again, not catastrophic. No one loses any cash. What I plan to do is wait and see who buys the bank, and what terms they plan to offer.

If I had more than $100,000 with WaMu, I think I'd move the uninsured cash out, just to be safe. But for anyone who has less, there's no reason to transfer any money and contribute to a potential run on the bank. Wait and see is the sanest, and easiest, approach.

it's the end of the world and I feel ... uh oh

Every financial news organization has broken out the big screamy photos and headlines today, as Wall Street institutions go down like dominos, the Dow cannonballs south, and veteran financial analysts are left making worrying comments about uncharted territory.

This level of global equity market inner workings is beyond me; one of the moments that really drove home for me how dire things could get was an offhand comment Fortune's deeply experienced columnist Allan Sloan wrote a few months ago in an analysis: "How can the Fed afford this largesse? Easy. Unlike a normal lender, the Fed can't run out of money - at least, I don't think it can."

Um, you're not totally sure? Uh oh.

Not being an investment banker, or an investor (not checking 401k. muttering through teeth "long-term returns, long-term returns ..."), I'm not immediately affected by any of this -- although living in NYC, I do have a few friends who work at places in the Wall Street orbit, who got pulled into emergency meetings today about how the sudden disappearance of a fair chunk of the Street knocks craters in their companies' revenue streams.

On the flip side, I also got IM'd by quite a few friends gleefully forecasting what low or nonexistent Wall Street bonuses this year will do to the local real-estate market, which is perennially driven into the stratosphere by big-spending financial-industry Masters of the Universe. One friend calculated that it would be worth the complete wipeout of his IRA if housing prices drop 10%.

But I suspect the economic Armageddon is about to hit home with a vengeance, because the next bank everyone expects to topple or get bought is WaMu. The bank I switched to after my last bank got shut down by the FDIC.

This time, I really might start stuffing money under a mattress.

I (heart heart heart) Amex

I rent cars a lot -- probably ten-to-12 times in a typical year. (Living in Brooklyn, I've never owned a car.)

I'm a klutz.

At some point, these two data points were bound to collide. Literally.

In July, they did. David and I rented a car for a day trip to Pennsylvania, to photograph a friend's wedding. The car pickup went smoothly. Traffic was good. My nifty and much beloved GPS got us to Bangor, Pennsylvania, with no trouble. We were early. We stopped to get lunch. We got a parking spot right bang outside the pizza parlor, and I managed to parallel park. Lunch was tasty. Birds were singing, the breeze was soft, the sky was blue, etc etc.

Then we went to pull out of the spot, and our day went to hell. I misjudged just how big the car I'd rented was, and pulled out of the spot in such a way that I managed to a) smack the hell out of the passenger-side mirror, which promptly fell into a dead-mirror slump, and b) totally annihilate the left taillight of the SUV parked in front of me.

@^&@%^$#%$#

To our credit, David and I didn't kill each other with blame and recriminations (him over my clumsy driving, me over his criticism of my clumsy driving). We Exhibited Teamwork and managed to stay rather calm throughout the afternoon, even through the "I can fix this with Krazy-Glue!" segment of the escapade, which is really better left unexplained. (A proper rendition of it requires many alcoholic drinks to cushion the horror. Note for future Krazy-Glue Experimenters: Did you know it's not recommended for use in 105° heat?)

Eventually accepting that both the sideview mirror and taillight were irrevocably smashed, I left a note for the SUV's driver and proceeded grumpily on to the wedding. (The bride, K, was gracefully sanguine about our ill-disguised crankiness and wish for a do-over of the entire day. The ceremony was beautiful and incredibly touching; I'm glad even the inevitable calamities that ensue when you throw together family, friends and Momentous Occasions didn't detract from the loveliness of the very happy occasion.) Driving back to NYC, mentally tallying the cost of fixing the rental car and the sideswiped SUV, I braced myself for our excursion to PA to cost $800 or so more than budgeted.

The next morning, returning the car, I sheepishly recounted my sad saga at the rental counter. "Something in the air today," the guy at the desk said. "You're the third one to come back with an accident this morning." Since it was 7:20am, I was pretty impressed.

As I always do, I'd rented the car on my In NYC Amex credit card. And as I always do, being cheap, I'd declined all additional insurance coverage.

In the back of my mind, I knew that my Amex, like many credit cards, came with some kind of rental-car protection. I'd never dug into the details -- and frankly, I assumed that in the event of an actual accident, I'd face some deductible or fine print that would render the Amex protections virtually worthless. The one previous time I'd had a rental-car issue (the hubcabs got stolen) and called Amex to ask about coverage, I'd been told that since I'd used a corporate card for the rental, sorry, I had no coverage, and would be eating the $40 for the hubcaps.

But on the off chance my Amex coverage could help get me out of my mess, I Googled for details on my Amex coverage -- and found actual, helpful info. In fact, what I found online suggested that my little smash-up would be 100% covered. No deductible. No cost. Completely, 100% covered.

Disbelieving, I rang the insurance customer-service number (1-800-338-1670) and asked about details of the card's coverage. "Fully covered," the saintly person on the other end of the line said. "You can file a claim online."

And so you can! And, wonder of wonders ... I did, the car-rental company sent an estimate straight to Amex, and Amex took care of the whole thing. After filing that online claim, I did not lift one finger further. Amex paid the $397 Thrifty charged for the damages, and the whole mess went away without any further intervention or expense on my part.

Wow.

I actually have warm, fuzzy feelings toward a credit-card conglomerate.

One of the things I'll have to figure out with my new Amex Blue card (grumble grumble) is whether or not it has the same rental-car coverage as my In NYC card does. I dearly hope so. I'm not planning to make a habit of smacking around rental cars, but it's pretty awesome to know that if I do, the damage is 100% covered. (Up to $50,000 or so cap -- which, since I don't rent Mercedes, is fine by me.)

Epilogue: The bill for the SUV's taillight totaled $47, since the person-I-hit had a husband willing to replace the light himself, and I only needed to cover the cost of the actual light. I remain amazed I got out of the whole thing with a total bill of $47. And I am never again in my entire life parallel parking.

Journalism, red in tooth and claw ...

When it comes to building a financial foundation, few things are more important than the career you choose. How's mine working out?

June 2007: Mass layoffs decimate the magazine I work at. I stay employed, mainly by being the youngest and cheapest in my beat area, but the casualties include all the editors and writers who I took the job to work with.

Dec 2007: I take a new job.

July 2008: Mass layoffs decimate the magazine I work at.

Because most of my job duties were for another unit within the company, I dodged the bullet; I'm still employed. But many of my friends are not, and I'm once again reminded that journalism is an incredibly shaky career field. I keep seeing incredibly skilled, dedicated journalists who have put decades of service into a publication unceremoniously tossed out when they reach the higher echelons of seniority -- and salary.

The larger problem is that the whole field of journalism is facing a business-model crisis. Advertising revenue is plunging sharply, with newspapers taking the worst hit but pretty much every kind of news publication everywhere feeling the pain. Worse, this isn't a cyclical trend. Advertising revenue probably won't ever come back to the levels we previously enjoyed; there are too many other ways for marketers to reach audiences now. From a civic-discourse-and-communications perspective, this is a good thing. From the keeping-professional-journalists-employed angle, it's not exactly a win.

Even more problematically, I don't think any news organization anywhere has figured out how to solve the fundamental capitalist-system dilemma that good journalism is expensive, while superficial "content providing" is cheaper, and almost always gives you better gross margins. Putting reporters on the ground in Iraq is costly. Blogging Brangelina rumours is not. Guess which one is usually going to make more money for a publisher? (Yes, savvy publications have figured out how to do good journalism without losing money. But you can still make more money doing other things -- and investors are generally motivated to do whatever is going to give them the highest possible return.)

I'm incredibly lucky, as far as my career goes. While many of the publications I've written for have folded, I've never been laid off. I'm well-paid, especially for journalism. And unlike last time my magazine went blooey, when I immediately knew it was time to start looking for the exit, this time I have a job in a newsroom I love working with editors and reporters who do fantastic journalism. There are a very small number of news outlets I would actually want to work for right now, and I'm at one of them. That rocks.

But I'm also increasingly aware that no matter how much I love it, journalism may not be a career I can sustain for the 30 or 40 more years I expect to be working. I've been at this fulltime for 10 years, and I'm on staff job #4. I keep dodging bullets, but at some point, the luck runs out.