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 ...
Beautifully written piece.
Thanks
>> So, why after?
All that cash lying around would make it hard to sleep. As would the lumps in the mattress!
Then there’s the problem of keeping it away from Mrs. Tick...
There you go, injecting sanity into a good panic.
||||||Doom and gloom ping list. Economics and geo-political economics. Freep-mail me if you want on||||||
Think about this - at the end of 2007 the FDIC balance sheet indicated a reserve balance of just over $53 Billion. That report was issued on February 15, 2008. It’s now March 4, 2009 and no report covering 2008 has been posted for review.
There are two important facts to note about the balance sheet.
First, as of December 31st (2007), the FDIC only anticipated losses of insured institutions to amount to $124 million. Now with IndyMac alone estimated to cost between $4 to $8 billion, how realistic is their assumption about future losses?
Second, about $46.5 billion of their assets are held in U.S. Treasury securities and mostly at face value. Two questions arise. What is the market value of those securities today? What might the market value of those securities be if they lose their AAA rating?
Thus, it should be apparent that if additional financial institutions go under, the staff of the FDIC will be swamped and their reserves will be significantly reduced, particularly, if another large institution fails. It should not be forgotten that many of these financial institutions are interwoven into a financial web. When one part of the web is torn, it affects the entire structure.
The FDIC is in big trouble and now they must take funds from the Banking Industry to stay afloat - we just may be doomed.
On the other hand, just think what would happen if the FDIC was not able to pay out deposit balances when necessary - therefore, if the FDIC goes south, America goes south. Unfortunately, with what is happening - that scenario becomes a possible scenario.
There’s plenty of genuine economic worries at present. Simply no need for this yelling “Fire!” is a crowded theater nonsense.
I don’t they really want communism. If they wanted to run everything, they would pick a guy who knew how to manage a large corp or state, not a community organizer/lawyer/junior senator. I think they really believe in this crony capitalism that socializes losses, privatized gains and redistribute those gains. That’s easy: just sign a bill to spend and tax and poof!
Trying to run everything is hard and Obama doesn’t like to do hard things.
>> The FDIC... must take funds from the Banking Industry
The FDIC has *always* “taken funds from the Banking Industry”.
I’m curious — how do you think FDIC *insurance* is supposed to work?
Another event that Gerald Celente predicted back in 2007 that we will likely see.
Drudge has it on his page, but it’s a bloomberg link (not allowed on FR)...glad you found it somewhere else and could post it.
“Is this Biden’s ‘manufactured crisis’?
Possibly. He was vague enough.”
sharp as he gets...it isn’t vague, it’s vacant...
The cool thing is, either way works to our advantage. That is, the collapse of the welfare state's ability to meet its promises and obligations. Like you & I paying for someone else's mortgage.
That's $64 quintillion (for those in Rio Linda and elsewhere).
I am beginning to believe that Obama is their front man. Obama is intelligent enough, but like you say, he doesn’t have the management experience. But he’s attractive (to them and over 50% of American voters) and he can speak nicely from a teleprompter. I think he’s more of his own man than his handlers might think. I have some other concerns as well.
i.e. King's new Clothes
My bank account has already been wiped-out. No problem!
Wholly cow batman!
Time to pull my cash out of the bank!
They were handy for tips when we used to go out to eat before Oprah told us not to.
But that's the entire point, isn't it? To force the central government into default in order to collapse the welfare state? I mean, how else do think we're gonna win this revolution - with guns?
The simple truth is that .gov cannot float another new issuance of Treasuries to cover FDIC shortfalls in the range of $1-2T. Actually, depositors are the least of Hussein's worries - it's the other $1-2T in both equity and bond holder losses from bank defaults that keeps the Kenyan's minions up at night.
Pity the holders are foreign governments and big public sector pension funds like CalPERS. Now you know why HRC was whoring out our country to the Chinese last week. They sure as h#ll ain't gonna pony up any more cash to finance BHO's fantasy budget if the value of their holdings goes to -0-.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
