Posted on 08/27/2008 5:13:21 AM PDT by John W
The Federal Deposit Insurance Corp. is considering a plan to borrow funds from the U.S. Treasury Department, as its seeks to shore up its finances amid an expected wave of bank failures, according to a published report Tuesday. Funds borrowed from the Treasury would used to cover short-term cash-flow needs related to reimbursing depositors in the aftermath of bank failure, the Wall Street Journal reported Tuesday, citing comments by FDIC Chairman Sheila Bair. The report said the borrowed funds would be repaid once assets from the failed bank are sold.
yeah, that’s gonna work out real well.
This of course means a rather large US Bank is about to go under.
Wachovia? Citibank?
This doesn’t look good. It’s going to be a while before we can work our way out of this mess. It could get worse though, with an Obama presidency.
The U S Treasury has money? Who knew?
Just this morning the talking heads on CNBC were moaning that the next President will inherit a $600 BILLION dollar deficit, which is being added to the multi-TRILLION deficit that will be ongoing until Jesus returns.
We sleep soundly (with the help of two or three sleeping pills) knowing full well that the economy of our nation is sound due to those whirring presses printing more wealth to distribute to the needy Americans.
Or that several medium-sized regionals are in trouble, which is also a very possible situation, or that they’re seeking money to backstop deposits at a number of banks, including regionals, if the preferred stock of Fannie or Freddie isn’t made whole. There are a number or large-ish regional banks that are holding rather a lot of Fannie/Freddie preferred on their balance sheets. If Fannie or Freddie go under and the government doesn’t make good on the preferred, then it might pull down another couple of banks.
Welcome to our Minsky Moment.
A year ago, most of the talking heads on CNBC, when they weren’t talking into the chests of the CNBC anchor-ettes, were pish-poshing anyone who said that this would spread beyond the sub-prime housing sector, that housing prices wouldn’t fall nationally, everything was fine, no need for alarm, it was just a bunch of bond traders having a bad day, etc, etc, etc.
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