The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments

URL:  http://boards.fool.com/lets-not-forget-that-those-20-cd-rates-happened-20695493.aspx

Subject:  Re: RON PAUL: The Federal Reserve Debt Engine Date:  4/27/2004  11:07 PM
Author:  yobria Number:  10045 of 35387

Let's not forget that those 20% CD rates happened in the midst of the saving and loan crisis. They were paying incredibly high interest--higher than they could afford, higher than their mortgage holder could pay--simply to keep people from pulling out their funds to invest it at higher yields elsewhere

My first real (summer) job was as a teller at a midsized, century old S&L in 1991. Even then some of our customers still had accounts that were paying almost 20% interest (must've been longer term CDs or similar). I remember looking at the interest rates and thinking, "can this be right?". The S&L declared bankruptcy the next year, when I had another summer job there, formatting all the PC hard drives, boxing computer tapes, and cleaning up. The last day we had champagne and some of the old executives dropped by to say goodbye.

I always wondered whether they could have avoided bankruptcy, or if competitive pressures would have driven them out of business even sooner if they hadn't offered such high interest rates.

Nick
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us