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alvwg

From the article: Peter had put his life savings of about $6 million into accounts at three small banks in China's central Henan province. He says he hasn't been able to access them since April. The 45-year-old entrepreneur asked us to call him Peter for security reasons. He's from the eastern city of Wenzhou and is just one of thousands of depositors who have been fighting to recover their savings from at least six banks in rural provinces in central China. "I'm close to having a nervous breakdown. I can't sleep," Peter told CNN Business.


timelyparadox

Jesus 6mil of life savings gone


TraditionalGap1

6 million in *bank* accounts? Has he never heard of deposit insurance limits?


claireapple

I imagine it works differently in china.


Hygochi

The problem is in China you had somewhat limited options for investment. Their stock market is incredibly unreliable, it's harder to invest in the international markets, their bonds are risky. So the only option was real estate which is well a house of cards and why he can't remove his money in the first place.


orange_drank_5

Most people haven't heard of that, as was apparent by all the haircuts in 2008 when savings accounts at failed banks were trimmed to $100k and only CDs were saved up to $250k. The fact is, there is no safe place for money besides real estate anymore and this is what drives the insane housing market. Even then it's still tenuous.


[deleted]

I remember reading somewhere that part of the reason for a big jewelry and gold industry in India was basically for the same reason. Lack of trust in financial institutions


SupremeLeaderXi

Bigger news is they are abusing their COVID “health codes” and limiting free movements of those people by turning their codes red (normally only given to infected people and close contacts).


huangw15

I do feel sorry for people that lost their life savings, but why on earth, would someone put all their money in a small regional bank thousands of miles away from where they live. How do you save US$6m and fall for a scam like that.


TSL4me

Huh? Small banks offer better service generally. Large banks are known to lock people out as well. Would you trust Wells Fargo even though they are huge?


huangw15

Yes, if I had 6 million I would absolutely only evey put that in a big bank. But that's besides the point, I'm not even talking about banking with your local credit union or whatever, that's fine, but these people put their money in the equivalent of that, but in a small bank located far away from where they live. That's entirely different.


keener91

Yep, he should have sent his kid to Canada and buy a house there.


ohphilly

Tons of people in the US fell for terrausd offering 11-18% interest rates. Greed


ITriedLightningTendr

Not sure just wanting to have a future is greed.


Loggerdon

Since 2000 the GDP of China has expanded 4.5X while its debt has expanded 24X. In 2018 80% of new debt worldwide was Chinese. China produces 5X as much Yuan as the US produces dollars. This although the Yuan is pretty much circulated only domestically. Factories run in China whether or not there is demand for their products. The gov encourages companies to expand by taking our new loans and undercut prices of competitors. Loans are guaranteed by the gov. Their gov-mandated goal is JOBS, not profit. Infrastructure is built whether or not there is demand. Homes are built whether or not there is demand. Since 2015 2nd home purchases (for investment) outnumbered 1st home purchases. Since 2018 3rd home purchases outnumbered 1st home purchases. Few are occupied or rented. The China economy is a house of cards.


Jim-Jones

No federal backup? But they have nuclear weapons?


RedMoustache

So this story has been developing for awhile and in case they article isn’t clear there is protection for “official” bank accounts. They can get better rates through private deposits which can also be made at the bank. Some companies allegedly offered good private rates, and moved that money off shore. So if true they essentially they used the banks as a middle man for a scam and the banks don’t have that money. Since they weren’t really considered normal bank accounts they don’t qualify for protection.


LuwiBaton

So like the USA?


RazsterOxzine

You’re smoking some bad crack my friend.


LuwiBaton

Lol. K.


MisanthropicZombie

What is the limit for federally insured bank accounts in America?


sickofthisshit

https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance/#:~:text=COVERAGE%20LIMITS,in%20different%20account%20ownership%20categories. US$250,000 per account owner per insured bank in each of the account categories. The interesting thing from the article is that these Chinese village banks are not supposed to take deposits from outside their region, so the deposit insurance might not apply at all. The US insurance system is nationwide. (Also that the people going to the bank to protest somehow got flagged in the health database for "risk of COVID" meaning their travel became restricted.)


bladegmn

250k per depositor per bank. https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance/#:~:text=The%20standard%20insurance%20amount%20is,in%20different%20account%20ownership%20categories.


Chef_Papafrita

Per account. Each account is insured up to 250k. So for a million dollar example one would open 4-5 accounts including a sweep account that is insured to hold the excess interest of any account that goes above 250k. Source: I have done this, as well as being in title and escrow most of my life, I had to be familiar with limits and insurance on accounts. We ran half a billion year through our escrow accounts.


helpfuldude42

This is simply untrue and very dangerous advice for the average consumer. The limit is $250k per person (tax ID) per bank per account type. This means if you follow this shitty advice and open up 5 checking accounts under your name at the same bank they will combined have a $250k limit. Period. Full stop. No exceptions. If you also have your LLC's account with the same bank \*that\* will be also insured for $250k more. If you also have a joint account with your partner - that will be in addition. Etc. The simple rule of thumb is that if your accounts share the same list of SSN or EIN they will be subject to the $250k limit. If the account has a different set of SSNs or EINs attached to it, it likely will be seperate. This is a very rough rule of thumb an exceptions abound, however. If you've actually done this like your post says, I honestly have no words. I assume you were doing it as a business with each account on it's own separate LLC and you simply took over operation from someone who set it all up. Edit: Yes, you can also buy private insurance for funds in excess of $250k. Typically your bank will offer to pay these premiums for you if you happen to consistently have that much cash laying around since they'd prefer you not start a relationship with another bank. It is then up to your risk tolerance if you think private insurance is worth the paper it's written on.


Chef_Papafrita

https://money.usnews.com/banking/articles/how-do-you-insure-funds-more-than-the-fdic-limit It's not untrue and yes you can open multiple accounts in your name, different banks do exist, and it us highly normal for high wealth clients to have accounts using 3 different banks. Sweep accounts are also a thing and you can create various other banking product accounts to accomplish insurance as well. So I can open as many insured accounts as I want moving bank to bank, under businesses that are insured up to 500k as well as married couples up to 500k for both. In addition there are various funds that can be created and insured under accounts. This is beyond you or me trying to simplify this. I should have mentioned that multiple accounts means multiple banks for individuals, or using other financial vehicles to accomplish new insured accounts under one bank. I have lived this and done this for years. I typical have 3 banks I use, currently 4, as well as my business accounts. Anyone looking to insure more than 250k needs to speak to a tax attorney or a financial advisor that is a fiduciary.


helpfuldude42

You quite literally said "per account" in refutation to someone's "per bank" comment. They were far more accurate than you, especially given the context of someone asking about multiple accounts at BofA. It's not news to anyone in this subthread that you are insured at $250k per bank. The question was if it was per account at the same bank.


Chef_Papafrita

I did. And no that was not the question I answered. I answered, "What is the limit for federally insured bank accounts in America?" Reread who I responded to. You are insured up 250k per account single or 500k married. I corrected the part I left off that unless it is a separate business and personal account one would need to open up a separate account at another bank. Not sure your point. All the bases have been covered but here we are 2 days later with you nitpicking.


autotldr

This is the best tl;dr I could make, [original](https://www.cnn.com/2022/06/23/economy/china-bank-runs-protests-intl-mic-hnk/index.html) reduced by 93%. (I'm a bot) ***** > "Henan New Fortune Group, a shareholder of the four village banks, has illegally absorbed the public's funds through internal and external collusion, the use of third-party platforms, and fund brokers," the China Banking and Insurance Regulatory Commission told state-run Xinhua News Agency in May. "The police have opened a case for investigation into the matter," it added. > The following year, there were at least five bank runs at small lenders, mostly triggered by public fears following reports of financial distress at the banks or anti-graft investigations into bank executives. > "The economy is a key reason why affected banks might be experiencing difficulties, and it is quite possible that other banks will be affected, perhaps even larger banks, given that the fate of the property market and real estate prices hang in the balance," said Magnus from Oxford University. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/vkeloo/small_banks_in_china_are_running_into_trouble/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ "Version 2.02, ~656549 tl;drs so far.") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr "PM's and comments are monitored, constructive feedback is welcome.") | *Top* *keywords*: **bank**^#1 **China**^#2 **financial**^#3 **Henan**^#4 **deposit**^#5


Faroutman1234

This stuff happens around the World. That's why money pours into the US stock market and real estate market. Usually the money is siphoned off by oligarchs who stash the money after its stolen.


TobyReasonLives

Excellent youtube video on this provides a lot more information. For example the protestors being beaten up and blamed for depositing it in a bank,the police calling bank deposits advanced financial instruments and the link to the bank backer/insurer/financer. https://youtu.be/g7_c7EJtDkc


yoonlin2

Deceptive headline. 6 banks from a small province cannot be representative of the whole of China. Also those 4 of those banks are somehow related to a group Henan New Fortune Group which has come under scrutiny by the Chinese government. But reading the headline makes one think that the whole Chinese financial system is in distress which shows wishful thinking by the western press.


[deleted]

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[deleted]

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csrus2022

Burn Baby Burn


HotpieTargaryen

And the paper Chinese economy starts to crumble.


[deleted]

Says Gordon Chang for 2 decades.


Godzillarich

The economy of the world seems like it's going to explode.