tag:blogger.com,1999:blog-14963913.post7994921300207814614..comments2023-10-27T20:27:57.900-04:00Comments on Kid Dynamite's World: New Financial Products - Part I: Ally's Raise Your Rate CDKid Dynamitehttp://www.blogger.com/profile/17475987512856310577noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-14963913.post-74916775838917498922010-10-01T16:55:22.093-04:002010-10-01T16:55:22.093-04:00Some people are working too hard on this one - All...Some people are working too hard on this one - Ally has to pay a premium for deposits because they're more or less the worst bank in America. There's no complicated hedging/structuring angle, except that the option to adjust is probably not as strong as you would hope. If I can get 1%+ at ING, Ally is going to have to pay close to 2% to pull in deposits. Every deposit is another chance for management to roll the dice on some more loans and either earn a bonus/request more bailout depending on outcomes.najdorfnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-63161833848066326652010-09-28T11:52:48.417-04:002010-09-28T11:52:48.417-04:00Who'd have thunk that the Pelosi strategy for ...Who'd have thunk that the Pelosi strategy for selling Obamacare ("You have to pass it to read what's in it") would carry over to bank products.StBhttps://www.blogger.com/profile/01363699522256218332noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-34938750752092471922010-09-27T08:59:50.516-04:002010-09-27T08:59:50.516-04:00Is it possible that they are servicing these CDs f...Is it possible that they are servicing these CDs for other banks for a fee? Also, is it possible because GMAC Mortgage was servicing so many of the bad mortgages/foreclosures of BO of A and Fannie/Freddie? (Disclosure: Mine was one. GMAC/Ally are a bunch of bastarditos.)Easycurehttps://www.blogger.com/profile/17440383472592292038noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-31179494692463232022010-09-27T08:57:10.823-04:002010-09-27T08:57:10.823-04:00You can do anything when you are backed by taxpaye...You can do anything when you are backed by taxpayer fundage!Easycurehttps://www.blogger.com/profile/17440383472592292038noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-44359874761200231752010-09-27T08:38:49.005-04:002010-09-27T08:38:49.005-04:00They also have only 2 months of interest as penalt...They also have only 2 months of interest as penalty if you break a 5 year CD. It pays 2.69%. Whats up with that ?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-4756483742409672072010-09-27T05:33:02.597-04:002010-09-27T05:33:02.597-04:00One would hope they've positioned their portfo...One would hope they've positioned their portfolio with out of the money caps, options on digital bonds and other instruments which would benefit.... who know?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-35967985897941159452010-09-26T23:39:40.839-04:002010-09-26T23:39:40.839-04:00Must be some sort of structured product. Who can s...Must be some sort of structured product. Who can say what the trade is? They're probably executing a derivative transaction for a net credit. Rate derivative presumably, but banks are doing wacky stuff these days. They give a small bit of the credit to the depositor as a premium yield, and keep the rest in reserve in case rates go up and their depositors start calling to raise their rates. If rates don't go up, they keep the leftover premium for a profitable trade. All of this, backed by the US taxpayer in the form of FDIC insurance. What's not to love (if you're a banker)?<br /><br />Or something like that. They're hedged, though, and when you get that prospectus it will say somewhere in there: <br /><br />'Ally Bank expects to earn a profit from its hedging activities. Any hedging transaction is required to be entered into at a fair price. That is, it must be priced in good faith; on an arm’s length, commercially reasonable basis; and in accordance with pricing methods and models and procedures used in the ordinary course of business for pricing similar transactions.'<br /><br />(I stole that from a Wells Fargo brochure for their MarketPower CDs :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-90162761122841822712010-09-26T22:43:27.826-04:002010-09-26T22:43:27.826-04:00Is this a way for GMAC to borrow (from their custo...Is this a way for GMAC to borrow (from their customers) at lower rates than anyone else would lend to them?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-25172871164982087622010-09-26T22:40:57.063-04:002010-09-26T22:40:57.063-04:00The free option they are giving away isn't wor...The free option they are giving away isn't worth much for starters. 2 years we not gonna see higher rates. Plus they not gonna raise 1 for 1 with fed funds from 1.75 starting point, are they? <br /><br />Fine print will tell ya all ya need to know.<br /><br />Sounds like ally is on a marketing bonanza with bailout $$$$. Just trying to get a customer base to sell loans too. <br /><br />ScharfyAnonymousnoreply@blogger.com