Ask AP: Friday bank failures, finding black boxes

Ask AP: Friday bank failures, finding black boxes

When a plane goes down at sea, why is it sometimes so difficult to find the black boxes? Shouldn’t it be as simple as equipping them with GPS devices?

Curiosity about hunting down a plane’s flight data and cockpit voice recorders inspired one of the questions in this edition of “Ask AP,” a weekly Q&A column where AP journalists respond to readers’ questions about the news.

If you have your own news-related question that you’d like to see answered by an AP reporter or editor, send it to newsquestions@ap.org, with “Ask AP” in the subject line. And please include your full name and hometown so they can be published with your question.

It seems that every Saturday, when I open up the newspaper, I see an article saying that some banks had failed on Friday night. Why is it almost always Fridays when banks go bust? And when the FDIC takes over a failed bank, what does it do during the weekend to make sure the bank will open on Monday?

Daniel Lippman

Washington

Most banks are closed or have limited hours on the weekend, so banks are typically shut down on a Friday to limit disruption for customers. The Federal Deposit Insurance Corp. is in charge of the failed bank’s assets, and usually has a buyer in place prior to the bank being shut down.

Over the weekend, a team from the FDIC works with the employees of the failed bank to secure its assets and merge the failed bank with the acquiring institution.

One of the FDIC’s initial tasks is shutting down the bank’s Web site and putting up a temporary site to inform customers about the failure. The FDIC and the acquiring bank also need to get up to speed with any major loans that are scheduled to close, or with any impending foreclosures or ongoing legal proceedings.

Customers still have access to their money through ATMs, checks and credit cards, but the bank’s branches are usually closed until Monday.

“We’re trying to maintain confidence in the banking system, and the way we handle bank failures is a key reflection of how to instill that confidence,” said David Barr, a spokesman for the FDIC.

Occasionally, a bank might be too unstable for regulators to wait until the weekend to shut it down, but those instances have been rare, Barr said.

Washington Mutual Inc. — the largest bank ever to fail — was seized by regulators on a Thursday last September as the Seattle-based savings bank crumbled under the weight of its enormous bad bets on the mortgage market. JPMorgan Chase & Co. bought WaMu’s banking assets for $1.9 billion.

Seventy-two federally insured banks have failed so far this year.

Sara Lepro

AP Business Writer

New York

I have often read of tracking grizzlies and wolves through their range of habitat, and even following the migration of the albatross over vast stretches, using GPS devices. Why is it so difficult to recover the black box when a commercial airliner is lost at sea?

Mel Logan

Sheridan, Wyo.

While modern airliners routinely use GPS for navigation, these devices are not attached to the flight data recorder and cockpit voice recorder (the “black boxes”) that monitor aircraft performance and the pilots’ voice communications. GPS systems function well in exposed, outdoor areas, but are useless in enclosed spaces or under water.

Instead, the black boxes are equipped with a beacon that transmits at an ultrahigh frequency for at least 30 days once it is immersed in water. The strength of the signal will normally allow search vessels to fix the exact location of the black box on the sea floor and to recover it whenever adequate salvage equipment is available.

For instance, days after an airliner crashed into the sea in Indonesia four years ago, search parties located the beacon’s ping at a depth of about 6,500 feet (2,000 meters). But they had to wait another eight months for the arrival of a specialized vessel that was able to get to the site.

This system usually functions very well, but in the case of the Air France Airbus crash into the Atlantic Ocean, several factors worked against it. The depth of the ocean at that point (13,000 feet, or about 4,000 meters) and the specific characteristics of the water itself, comprising a number of layers of different salinity and temperature, diffused the signal and made it difficult to fix the exact position of the pinging.

Interestingly, submarines routinely use these water layers to hide because they also scatter sonar signals emitted by anti-submarine warships.

Slobodan Lekic

Associated Press Writer

Brussels

How exactly is the national savings rate calculated, and what does it include and exclude?

We keep hearing about the decline in the national savings rate from around 10 percent in the 1980s to almost zero until the recent recession. But I read that the savings rate does not include the amounts people save in their 401(k) and similar retirement plans.

If true, why are those amounts excluded? And doesn’t that distort comparisons with the 1980s, when such plans were a much smaller part of people’s retirement planning?

Michele Hymel

Albuquerque, N.M.

The personal savings rate that the Commerce Department calculates each month is derived from data it collects on people’s incomes and spending.

The calculation is done on what’s called a cash flow basis. The government totals up all that people spend in a given month and then subtracts that figure from people’s disposable income — what they earned minus what they spent on taxes.

The result of this calculation, expressed as a percentage of disposable income, is known as the personal savings rate. It does include the amount people put away in any given month as contributions for such things as 401(k) plans and other savings accounts — any money that an individual doesn’t spend in a given month is counted as saved by the government. (Matching funds contributed by employers are also included — they’re considered income that isn’t spent.)

The Commerce Department recently released revised data on the savings rate that shows it has been climbing since the spring of 2008 as the recession deepened and people became worried that they didn’t have enough put away for a rainy day. From a low of 0.8 percent in April 2008, the savings rate rose to 6.2 percent of disposable income in May — the highest it has been in 14 years.

Martin Crutsinger

AP Economics Writer

Washington

Have questions of your own? Send them to newsquestions@ap.org.