Advertisement for High Yield CDs Leads Only to Phone Frustration : BANKING/FINANCE
“Diversify Yourself,” the advertisement stated in bold headlines. Then in small type: “Let our high yield CDs open up a new dimension of investment potential. . . . “
The ad in Tuesday’s edition of the Wall Street Journal sought $90,000 certificates of deposit for six-month and one-year terms. It offered to pay rates that would yield 8.238% for the shorter term and 8.491% for the longer term.
Readers of the nationwide publication could be pardoned if they happened to call the toll-free number that was listed.
The ad was placed by American Diversified Savings Bank in Costa Mesa--the institution that regulators had closed Monday morning.
Thomas J. Haupert, former president of American Diversified, explained that the savings and loan had placed the ad the week before, and by Monday it was too late to cancel.
Anyone who might have called to deposit money, though, would have been frustrated just trying to get through. Telephone lines were tied up all day Tuesday as regulatory employees working at the S&L; busily talked to depositors who wanted to get their money out.
“The only calls I got were from friends who joked about it,” Haupert said.
The ad illustrates one of the reasons regulators wanted to close the insolvent savings and loan, which they themselves had kept open after seizing it 24 months ago. The average yield on CDs nationally is 7.08%, and American Diversified’s higher rate was helping to drive up the costs other S&Ls; had to pay for deposits.
