The FDIC
Posted by Engtovo on September 29, 2008
Related to this CNN fear mongering they kept saying over and over the FDIC is fine and not to worry even though I have read several things that bring up legitimate questions about that. On August 27th after the Indy Mac failure MSNBC had a story
Mortgage mess puts more banks at risk – Deposit insurance fund, depleted by failures, looks to rebuild capital
http://www.msnbc.msn.com/id/26424106/
Here is a quote from that story about FDIC
Those failures have depleted the insurance fund, which now stands at $45 billion — less than the FDIC is supposed to have on hand, according to Daniel Alpert, an investment banker at Westwood Capital.
“You’re talking about roughly $45 billion of reserves insuring $4.5 trillion of deposits,” he said. “And you’re in an environment right now where non-current loans, delinquent loans are increasing at a faster pace than banks putting aside reserves. That’s not a good thing.”
To replenish the insurance fund, the FDIC said it plans to raise the premiums it charges banks — and may charge the highest premiums to the banks with the riskiest deposits. While that will put the fund on a sounder footing, it could make life more difficult for bankers trying to shore up their own assets, according to Peter Sorrentino, a portfolio manager at Huntington Asset Advisors.
“You’ve got a risk of siphoning off capital when it’s needed,” he said.
Bair also told the Wall Street Journal the FDIC couldn’t rule out the possibility that it may have ask the Treasury for capital to tide it over through the coming round of bank failures. The money would be used to pay depositors insurance claims, and then paid back after the assets of the failed bank are sold.
They also Had a story with this title:
FDIC may borrow money from Treasury
report: Money needed to see agency through an expected wave of bank failures
http://www.msnbc.msn.com/id/26420600/ the page has expired though, so there is no story how convenient.
Bob said
The FDIC IS safe, cause the bailout bill reduced reserve requirements to zero, so they CAN’T fail. They’ll just run out of cash temporarily.
Hype and hoopla. The bailout bill is close to five hundred pages!
Bob said
Oops, misleading error: It’s the bank reserve requirements that were done away with. Now no bank can claim failure and invoke FDIC protections. If they are out of cash, you can just wire the “money ” to your intended destination, even another bank with actual cash, or a gold broker.
I’m starting to think the whole reason behind this artificial financial crisis is to get commerce completely dependent on electronic money, the cashless society, as a transitional phase leading to chipping everyone, a stated
near term goal at the most recent Bilderberg summit.
Of course there are other purposes, like sweeping the markets to further absorb the wealth of the middle class.