The WSJ stepped into the high yield online savings world with an article on transfer times using online banks. There wasn't a lot of new information but it was a decent recap of why it takes 2-4 days to process a transfer.

The Journal article describes this process of someone sending a transfer from an online svings account to their online checking account. at a different bank:

"What happens during that time? ING sends transactions in batches during the day to an automated clearinghouse, which sorts them and moves them to the receiving bank in a matter of two to four hours, according to Arkadi Kuhlmann, chief executive officer of ING Direct USA, a unit of ING Groep NV, and Elliott C. McEntee, chief executive of Nacha, the Electronic Payments Association, a not-for-profit group that oversees the automated clearinghouses.

In many cases, the receiving bank gets the transfer the same day. Under rules established by Nacha, money that moves on Monday should be available by the end of Tuesday. If the transfer slips to early Tuesday morning, the money should be available first thing Wednesday morning."

Banks then wait another day or two to ensure that the funds are good and have cleared. According to the article, depositing money into an online account took even longer- 5 business days, as ING wanted to make sure the funds were good.

Here are some tips for speeding up the transfer process:

• Plan ahead if you know you need the money.
• See if your money market account ccount has check-writing privileges. Paper checks can actually clear faster than electronic transfers.
• Compain if the transfer takes more than 2 business days to receive money you "pushed" from another bank. NACHA, the organization thatruns the ACH system can levy fines on banks if they hold your money for too long.

The article states that Europe has a faster transfer system and that enhancements to speed up the transfer process are under development. That's good news for consumers. In the meantime, if you've done a transfer and it takes more than 2 business days, call your bank and complain.

So, if you need your funds from an online account, plan ahead.

ING Direct has bucked the prevailing wisdom like many other banks and raised the rates on severa of its certificate of deposit terms and its Electric Orange Savings Account. While the market is still assigning a greater than 50% probability that the Fed will cut rates again after its emergency cut of 50 basis points (half a percentage point) two weeks ago, banks have mostly held their rates steady or have even increased them. This analysis shows that savings account yields have actually held up relatively well as the market and economy has fallen apart.

That trend seems to be continuing. ING Direct raised the rates on its 12 month CD and its 18 month CD by 25 basis points (quarter of a percentage point) making them more competitive. It also raised the rate on the top tier (above $100,000 in balances) of its Electric Orange Account.

The parent company of ING Direct, ING was recently bailed out by the Dutch goverment to the tune of $13 billion. ING has major insurance and commercial banking operations. The retail bank has $338 billion euros in savings and current-account deposits at the end of last year, making it one of the world’s largest retail banks.

Sovereign Bank was quietly purchased by Banco Santander after a run caused it to face collapse. More of this is coming even with the government bailout.Sovereign has a large franchise in New England. It's always been the #3 bank in the region and many thought that it was vulnreable.

In the last quarter the FDIC said customers pulled $4.2 billion, or almost 9 percent of deposits from the bank before the government's $700 billion government rescue plan. The Boston Globe spells out the last days of the bank as in independent entity, including the State of Massachusetts withdrawing $300 million in funds as Sovereign stock dropped and the bank looked increasingly shaky.

"When Massachusetts treasury officials called Sovereign to ask why the stock had fallen below $3, they couldn't get a good answer, said Cahill, the Massachusetts treasurer. Bank officials were attributing the drop to the market's overall plunge; the Dow Jones industrial average fell 777 points, its worst one-day point loss, after the first version of the bailout bill failed to pass.

The state Treasury had a total of $575 million at Sovereign. Of that, $275 million was for state operations, money that was collateralized, or insured against any losses. But the other $300 million, which covered a number of programs, was uninsured.

The treasury staff first started worrying about the stock price at about 2 p.m. By 2:55 p.m., it had advised Cahill that the state should move the funds. "I said, 'Do it,' " Cahill recalled.

And within 20 minutes, the funds were wired out - not to another bank, but to Fidelity, the Boston investment giant that manages $7.5 billion in state and municipal funds in a money market account."

The run would have resulted in failure but the FDIC intervened and had Banco Santender, an existing shareholder buy the rest of the company for approximately $1.2 billion.

In response, the FDIC has decided to provide unlimited protection through 2009 for non- interest bearing accounts that process payments for payrolls and are used by businesses.