What happened to E*Trade?

(This entry has been expanded since originally posted.)

I signed up with E*Trade Bank in the late 1990s, when it was Telebank. (E*Trade later bought the company.) It was great — incredible online banking and easy bill pay, plus, if you were charged a fee to use someone else’s ATM, E*Trade would refund you up to $1.50.

That was then. Since then, E*Trade Bank has gone steadily downhill, culminating in today’s almost-laughable fiasco.

Twice in the last six months, E*Trade lost our deposits. (Because it’s an online bank, we have to mail them in.) When we called, they were eventually able to find them, but it’s kinda scary to have your bank tell you, “We can’t find your money.”

I also learned that the company’s records don’t go back beyond 2000. So when I called to find info about stocks I purchased in 1997 and 1998, I was out of luck. They simply didn’t have my purchase data.

Today, we learned that E*Trade Bank had again lost our money; I had the tracking number of the envelope as was able to confirm it was received.

E*Trade’s excuse, courtesy of “Tom”: We just bought two banks — HarrisDirect several months ago, and Brown more recently — and we’re really busy. He also suggested that the Post Office lost the deposit, until Karen reminded him that we had used Express Mail, had a tracking number, and had confirmed delivery.

But he wanted us to excuse our bank for losing $1000 of our money because it bought two other banks. As if banks are so forgiving if you get bogged down in other things.

But then, the kicker: Tom the E*Trade Bank rep told us that we should open an account at a local bank. He wasn’t blowing us off; he wasn’t saying “Go somewhere else.” He was suggesting that we then link that local account to the E*Trade Bank account.

“Why would we do that?” asked my wife. After all, if we had a local account we wouldn’t need E*Trade. No answer.

Another brilliant idea from Tom the E*Trade rep: Tap into my mother’s brokerage account, of which I am an authorized user. But it’s not our account! said Karen.

Then Tom tried to convince Karen how wonderful E*Trade was because of its great CD rates.

So the idea is, E*Trade Bank might lose your deposits on a regular basis because it doesn’t have the staff to handle the acquisitions it made, but boy does it have great CD rates!

The original reason we loved E*Trade was it’s sophisticated online banking. But now that’s not unusual. The banks we looked at — Bank of America and Wachovia — have equally slick systems. And I bet they won’t lose our money.

It’ll be a bit of a hassle transferring our checking, savings, securities, and IRAs, along with my mother’s brokerage account. But heck, finding a local bank was E*Trade’s idea!