Reading the tea leaves
As some Scissorheads may remember, last week, the FDIC proposed raising fees on banks to build up its deposit insurance fund, which had only $19 billion at the end of 2008. That idea provoked protests from banks, who said such a burden would worsen their already shaken condition.
Today Senate Banking Committee Chairman Christopher Dodd moved to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department. Currently, its line of credit with the Treasury is $30 billion.
So what is the big deal, Tengrain, you ask?
The FDIC is the entity that guarantees your money is safe (up to $250,000) if the bank should fail. Please note that the amount only recently and temporarily changed from $100,000; it will change back to $100,000 in a year or so (if I recall correctly).
Now, generally, we might be thinking that this is a good thing, the FDIC has been underfunded thanks to Big Dawg and then Chimpy changing funding requirements at the urging of Phil Gramm. But could this also mean that people in charge are getting ready for the big banks to fail?
The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures.
This should be interesting to see what happens next.
Cue the new RTC (and I worked for a while at the old RTC). Two ways to get the money: raise the fees and go after the executives, boards and big borrowers (who engaged in fraud) of the failed institutions to try to get some value back. It’s coming.
Sounds like they plan on covering the costs of a lot of bank failure.
i dont think anyone can stave off the impending implosion
besides the Fed can just print more worthless money to cover your deposits
(said while sleeping on a very lumpy mattress these days)
“(said while sleeping on a very lumpy mattress these days)”
Kind of ROTFLMAO! Well?
They had 30 billion and burned it up on failed banks already. What are they thinking now? About a 1600% increase in failed banks coming down the pike? What else would the FDIC need the money for because I (honestly) don’t know what, other than paying out to depositors of failed banks, the FDIC does?
Incompetent, venal slugs will not enjoy their rickety cart ride to the guillotine. Oh no they won’t.