Through the years BauerFinancial has earned the reputation of “the nation’s bank rating service”.
If all banks and credit unions have federal deposit insurance what difference does it make what the rating is? Consumers (and businesses) that exceed the deposit insurance limit could lose some of their money in a bank failure; it is surprisingly easy to go over the insurance limit without realizing it due to interest payments, proceeds from the sale of a house, retirement accounts, death of a signer on the account, conditional clauses in trust documents, brokered deposits, etc. Additionally, an acquiring institution is not obligated to keep paying CD rates at the rate contracted with the defunct institution. Interest rates are subject (likely) to drop, especially if they are above the market averages. Businesses have another concern; if their bank fails they can lose their “line of credit” (source of funding) until they are able to find another lender.
Regardless of insurance limitations, individuals and businesses could be subject to disruptions in direct deposits if a bank is closed with no acquirer. The same goes for any bills that you have automatically set up to pay from your checking account. Anything set up on the internet will have to be changed, but it’s not just virtual; any paper checks outstanding could be returned as unpaid if the bank fails and is shuttered. This can trigger fees or worse.
We rate all U.S. chartered banks and all federally insured credit unions with assets of at least $1.5 million.
BauerFinancial, Inc. has been analyzing and reporting on the financial condition of the nation’s banking industry since 1983. With our help, countless depositors successfully navigated their way through the savings and loan crisis of the ’80s when others lost billions of dollars in uninsured deposits. Through the years BauerFinancial has earned the reputation of “the nation’s bank rating service”. Now, more than a quarter of a century later, hundreds of newspapers depend on our ratings for their readers. Over the years, federal and state regulators have referred thousands of inquirers to Bauer.