FDIC's Bair warns on bank deposit insurance fund

Houston Chronicle ^

[txmissy]

WASHINGTON — The head of the Federal Deposit Insurance Corp. has warned that the fund insuring Americans’ bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts.

FDIC Chairman Sheila Bair acknowledged, in a letter to bank CEOs, that the new increased fees and hefty emergency premium the agency voted to levy last week will bring a “significant expense” to banks, especially amid a recession and financial crisis when their earnings are under pressure.

“We also recognize that assessments reduce the funds that banks can lend in their communities to help revitalize the economy,” Bair wrote.

But given the accelerating bank failures that have been depleting the deposit insurance fund, she said, it “could become insolvent this year.”

“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,” Bair wrote in the letter dated Monday to the chief executives of the nation’s 8,305 federally insured banks and thrifts.

[girlscout]

Really. MrL9 keeps telling me to take money out of the bank so we can bury it somewhere for easy access.

My question is will money we have in our checking account just one day be gone? I know the banks can’t do that, it is our money, but is that stupid of me to think? Will we have any notice that our money in the bank is not safe anymore?

I’m with Wells Fargo, btw.

I really don't know. Yesterday I would have said no, it's not possible, but yesterday I still had a little faith left in our banking industry. Our country has gone crazy and I just don't know what to think anymore.

One option we have would be transferring money to a Credit Union. They operate under completly different account insurance, not FDIC.

I'm with BOA. That's after a number of different name changes over the last 33 years. I also have a seperate account with a local credit union.

If the banks hadn't been so greedy and gobbled up all the smaller banks to make one giant bank I wonder if they'd be in this mess.

[Eagle50AE]

Thank You,, I am not Alone in my thought train..

[estrogen]

Now that comment is based on the idea that this nation is not being attacked from within with the full intent to destroy it. I am not ruling that out BTW. This much stupidity doesn’t happen by accident.

I hate to be a loon with a tinfoil hat on , but I agree with you.

[Nervous Tick]

>> Save more, spend less. It’s all it takes to bring forth a credit default and collapse the welfare state.

Your theory is intriguing. I guarantee you I’ll be giving it more thought.

FRegards

[Red Steel]

One option we have would be transferring money to a Credit Union. They operate under completly different account insurance, not FDIC.

National Credit Union Administration (NCUA)

"Is My Credit Union Federally Insured?"
http://www.ncua.gov/indexdata1.html

[meyer]

Imagine, loaning money to the very agent of your oppression.

You put that very well - bears repeating!

[Nervous Tick]

>> the whole government may go broke

Won’t happen.

>> Their remaining solution will be to crank up the printing press and inflate the currency.

That’s what they’ll do. On the rare occasion they admit to it, they will call it [cough] “monetizing the debt” and hurriedly move on. It sounds nicer and less threatening than “debasing the currency”.

>> That, I suppose, and confiscating the wealth of the few that still have any.

I will be happy to hand over some of my lead to them, in that case.

[Eagle50AE]

>>> You didn't see the article that Obama agreed to give China land if we fail to pay back said debt? Yep, the Obama administration has granted eminent domain rights to China as leverage for our debt. <<<

Sadly,.. I DID read it, and if a 1000 other Irrational, Destructive, prearranged maneuvers to kill our way of life had not preceded it since Nov., it May , just May have been the camel back-breaker..

If events continue to “News Alert” at the recent rate , there is no end to the damage that can be performed..

I relate to Tesla in “Prestige”

” Society can only accept one change at a time “

We are not up against amatuers..

[semantic]

It all comes down to current consumption - slow down earnings & the savings generated from new production, and we can starve the beast. Btw, here's a link to a CFR blog where they speculate whether there are enough domestic savers to offset any shortfalls in Treasury purchases by sovereign wealth funds (eg China):

if the Pandey/Setser estimates for official purchases are right, that private investors snapped up more Treasuries than the world’s central banks. Central bank demand accounted for a far smaller share of total issuance than in the past few years. In 2007, for example, central bank purchases easily exceeded total issuance. The big increase in demand for Treasuries in 2008 came from private investors in the US.

Who bought all the Treasuries the US issued in 2008? And who will be the big buyers in 2009?

[conservatism_IS_compassion]

ACORN is rolling in dough, and they bullied the banks into courting insolvency. Sue them.

[girlscout]

Thanks! That’s the one I was talking about.

[semantic]

M: Their remaining solution will be to crank up the printing press and inflate the currency.
NT: That’s what they’ll do.

Frankly, I prefer the term 'quantitative easing' (QE for short). It's just a much more refined and elegant way of describing the wholesale printing of money. (In actuality, the marking of electronic debits/credits on the books of Fed bank members who "purchase" Treasuries and then use them as collateral to gain new reserves. Quite a game, no?)

As to the country going broke, ask Zimbwabe how it's working out for them. Once a currency is debased, no one can afford the cost of imported goods (say, like oil?), nor will anyone lend you anymore money. If that isn't a good description of being broke, I don't know what is.

[Eagle50AE]

>>> ACORN is rolling in dough, and they bullied the banks into courting insolvency <<<..

If we keep on the latest trend, it is feasible they may have 2010 and 2012 secured by this fall,.. if not already..

[Dustbunny]

I guess this another attempt at getting a run on the banks.

[vis a vis]

What is a bearer bond? Can you explain why this is a good idea? What kind of guarantees on money invested?

Thanks

[semantic]

I haven’t seen that one (floops ie feedback loop)

I've been seeing it pop up in different financial blogs. In fact, it just showed up again on a comment posted over at the CFR blog:

so however trivial the trigger, self reinforcing feedback loops can come into play. positive floops / negative floops.

CFR Blog Comments

[Candor7]

A bearer bond is a CD which is redeemable at any of the banks offices around the world. Its generally a commercial instrument, but you ask for 'em, you can get 'em.

[Kimberly GG]

‘This much stupidity doesn’t happen by accident.’

NO, it doesn’t and for what it’s worth, my tin foil hat is securely in place.

[vis a vis]

Any Canadian bank better than another? What rates do they typically pay?

[Candor7]

All Canadian banks have eliminated any toxic papaer and paid down that debt to zero. They used fully prescribed preferred share IPOs to do it.

Now there are a huge array of bonds available, bearer bond CDs redeemable at any of their banks around the world as commercial instruments typically pay 4 to 5 per cent right now.