Posted on 03/05/2009 2:20:37 PM PST by patriotmediaa
The FDIC needs an infusion Concerns about the long-term solvency of the FDIC has prompted the insurance fund to approve a one-time “emergency” fee and other assessment increases within the banking industry.
“Without these assessments, the deposit insurance fund could become insolvent this year,” [Chairman Sheila] Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.
“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”
Last year the failure of 25 banks led to a $33.5 billion loss. Another 16 banks have failed this year already. The new fees will reportedly generate $27 billion to help replenish the coffers that repay customers for deposits up to $250,000 when a bank fails.
Although Bair has said the FDIC won’t seek government help to rebuild the fund, some analysts believe consumers need to monitor the situation closely. “If the FDIC is saying that there is this serious problem, then we should all be concerned,” said Edmund Mierzwinski, consumer program director at U.S. PIRG, a Boston- based consumer-watchdog group. “I think there is a chance the FDIC is going to have to ask taxpayers for money in the future.”
It just keeps coming...
...and with these assessments, the fund could become insolvent anyway.
will it be a run on the banks?
“will it be a run on the banks?”
I’ve already withdrawn all my bank funds. The collapse is coming and it won’t be pretty. I won’t be surprised if the FED doesn’t just seize funds outright.
We need someone to step up and take leadership! Obama prognosticating on stocks while Barney frank and the other Freaks are either flapping their jaws or jetting off to Italy on Taxpayer funded vacations is NOT helpful. And definitely not what the brain dead Obamamanics thought they were going to get.
Hell, by the time these people actually get control of matter (Or, likely, the other way around) there will be little, if any, wealth left to Tax or redistribute.
Thank God it is still cold outside - The usual suspects will not riot until it is T-Shirt Weather or it becomes clear to them that the gravy train O promised is out of gas. I predict a long hot Summer.
Again /rant
Don’t even say it!!! Aieeeeee!!
The trouble with manipulating an ignorant mob is that it’ll happily turn on you too, once it realizes you can’t deliver.
Mark my words, Obama is going to down as our own Salvador Allende.
The next thing you need to do is convert that cash to durable goods and into some form that will be usable when the inevitable hyper-inflation comes. The cash will be useless.
Here is whats about to happen:
1. China and other foreign entities refuse to purchase more US debt.
2. The US Government has two options at this point:
a. decalare bankruptcy or
b. print more money.
In every case in recorded history, option b is taken. Which leads to
3. Hyper-inflation destroys the value of the currency. The dollar is not worth the paper it is printed on.
You should do some reading of things written by folks who survived the collapse of the USSR, and i would also suggest reading memoirs of those who lived through the meltdown of the Argentine economy in 2001. Do a google search on Dimitry Orlov. I believe that is his name.
GOLD...BUY IT...BURY IT!
then the people will run to the GOVERNMENT for help
The fund technically is already insolvent if one were to compare the scale of potential obligations to reserves.
There simply aren't enough assets at Citi (which, btw, saw its stock drop below $1 today) to pay off all depositors, so they'd quickly run through the $35b or so available from the FDIC.
It would probably take Congress to authorize the sale of Treasuries to the tune of $500b+ to backstop the FDIC for Citi alone.
Where it gets fun is the expected buyers of those Ts (Chinese) would have experienced a very real $500b+ loss on their equity/bond holdings. Ya' think they'd be in any mood to pony up the bailout cash?
Where it get doubly interesting is a default triggers those scary $50T or so (notational value) CDS. With only a 2% shrinkage (assuming 98% of the bets clear against each other), we're still talking a cool $1T that needs to be covered by ... taxpayers?
You got it CT. That’s exactly what is gonna happen, and it’s exactly what we want to happen. If the welfare state doesn’t collapse this time around, it will never die.
Excellent points, all.
Where the Kenyan fails the test is his lack of any core sense of capitalism. We need to allow the private markets to clear, but he's committing the $USD to backstopping all of these losses.
So when it goes down (and make no mistake, it is going down), the welfare state goes down with it. Not such a bad idea if you stop and think about it.
There’s plenty of blame to go around and, yes, back to Carter.
But the Kenyan Manchild is due his share of the blame, for fiddling while Rome burns.
I swore when he announced his fantasy budget that he was trying to tank the markets on purpose. Massive gov’t expansion + tax increases during a recession? He really is clueless - prattling on about health care today while markets collapse.
Too many groups need an “infusion”. Things aren’t going to hold if someone doesn’t stop this mess.
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