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i noticed the last couple of years when reading the annual financial statements for the co-op , that there is a statement from the accountant that says the reserve fund is kept in accounts where it may go over the fdic insured limit, however the accountant states that they see no problem with this.
5 years ago, when i first noticed this saw this i didn't worry too much, but i think the realities of what happened in the financial world in the last couple of years would say that this is not a sound idea, especially when your dealing with other peoples money.
Banks fail everyday.
Any comments.
Income is not the goal. Protection is the objective. All our reserve funds are in T-Bills. There is never a problem of liquidity or access.
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Dear Escape,
Your posting is timely. In an effort to de-risk our reserve funds and to tackle that note in the audited financial statements, our Co-op purchased several CD’s from Vanguard (all of our reserve funds are at Vanguard). They are all FDIC insured.
Over the weekend, I saw that three banks in Puerto Rico failed. We have CD’s at two of them totaling $72k. As a result of the FDIC insurance, I do not foresee any problem getting the funds back (perhaps we might encounter a small delay).
As a former Treasurer and current President, believe me that it is much easier going to the Co-op and the Board saying that we may have a small delay in accessing the funds than it would have been saying that the funds are fully or partially gone. I am so glad that we have that FDIC coverage!
You never know when a bank is going to fail until after it does fail. In my opinion, all co-ops/Condos and Con-opts need to make sure that all of their funds are FDIC covered immediately. The only exception would be to have the funds placed in similarly guaranteed investments like U.S. Treasury Bills/notes or agencies. Also in my opinion, I would not even invest in municipals at the moment due to all of the trouble our state and local governments are having.
Here is the link to the news article: http://www.washingtonpost.com/wp-dyn/content/article/2010/04/30/AR2010043003084.html?wprss=rss_business
Steve
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