Posted on 03/04/2009 11:45:13 AM PST by 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.
(Excerpt) Read more at chron.com ...
I didn’t see this posted - sorry if it’s a duplicate.
This really, really worries me.
Since the President Obama said there’ll be no more BLANK CHECKS maybe he means that he won’t come asking for blatant spending authority to just go out and stimulate the economy, this is good news.
No worries. We have a printing machine behind the curtain.
What? You mean it’s possible that the much vaunted FDIC, guarantor of multi trillions of America’s gold, is not worth the paper it’s made of?
A lot of banks are teetering close to insolvency, and the FDIC wants to increase the fees they charge to the banks by more than 200%.
This will only increase the number of bank failures because some banks won’t be able to absorb the added cost.
Increased failures will result in more funds being drained from the FDIC.
What a vicious little circle.
Is the Sheila trying to spark a bank run??
I think they are trying to precipitate a run on the banks.
That does it. I’m getting out my shovel and my shoe box.
Is this what they refer to as “stress testing”
No worries, we’ll just print some more!
Expect an announcement in the not so distant future. The FDIC label will only be available on ‘accepted financial institutions’. Politically accepted (read nationalized). I hope I’m wrong, I can’t see this going any other way though.
The whole team needs to be run out of town.
Is this Biden’s ‘manufactured crisis’?
This is where we Nationalize the entire banking system...
All of this makes me nervous. I dont understand a whole lot of it. Im wondering if I need to take my money out?
K
Pay careful attention to that sentence. The FACT is, there is no FDIC "set aside" that, once depleted, means the Fed can't or won't make good on insured deposits in a failed bank. FDIC insurance is just a part of the general public obligation (like social security or medicare). The fund "balance" is an accounting tool -- a way to tell if banks are ON THE AVERAGE kicking in enough to fund expected payouts. The fact that the balance in the "fund" goes "negative" will NOT preclude paying depositors in failed institutions.
Repeat for emphasis: the FDIC won't "go broke" unless the whole government "goes broke".
Sheesh. What a way to create public panic and a run on the banks! Irresponsible, IMO.
This is not news. Given the trouble emanating from Wall Street, one has to expect the FDIC fund is taking hits.
Not good...
I don’t know, but given the nature of government, I wouldn’t be surprised.
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