US weighs new fund to backstop deposits if more banks fail, Bloomberg News says

Reuters ^ | 3/11/23 | jason reed

[OpusatFR]

Silly wabbit. The debt is sold and you still pay.

[Night Hides Not]

The FDIC replenishes the fund by selling assets from the failed banks. I worked there from 2009-2014, when 500 banks were closed.

[silent majority rising]

Panicing?

[Obadiah]

Well look at that, a way is being cleared to roll out CBDC. What a coincidence, and right around May as predicted.

[DannyTN]

Backstopping deposits seems a lot less disruptive and less expensive than shutting down a bank.

[C210N]

Yes, I think they are.

[usurper]

So if you have a credit card with a bank that goes under what happen to the debt.

They just sell the debt to someone else. Same as with your mortgage. They don't have to make their creditors hole but you sure as hell will have to.

[C210N]

Well we should feel better, they don’t actually have the money but they can borrow it if needed......................

Yes, the DSC can roll out any one of a potential million cover stories for what they actually do - just print more. it's worked for so long, and now we find that a dollar is worth 2% of what it was in 1913.

CBDC is what I think we'll see soon as a "solution". Other facets could include a "WW3" scenario - war is always an option the DSC uses to get out of jams, or to simply usher in a new paradigm.

This time though, I believe the DSC is in panic, and knows they are being taken down.

[fatboy]

“.....and the car I just began to lease three weeks ago.”

________________________________

Why?

[Honest Nigerian]

The $2 billion has to cover depositors up to $250k each.
So they could make 8 thousand depositors whole if all had the maximum exposure?
One word to summarize this situation: BOHICA

[frank ballenger]

Side note.

Do people hide money under mattress?
A little less than 20 percent of Americans hide cash in a sock drawer, while 11 percent put it under the mattress and 10 percent secure it in a cookie jar. Another 9 percent keep their cash somewhere else in the house. CNBC

[Wallace T.]

As of December 31st 2022, the FDIC had approximately 126 billion dollars in its Insurance Fund. That is more than adequate to cover the approximately 20 billion dollars that were insured at Silicon Valley Bank. As for the uninsured deposits, the FDIC will pay a portion of the deposits and they will receive a receivership certificate. The FDIC will administer the Affairs of the bank liquidating assets and possibly selling some deposits. That will take time. The Securities portfolio is not marked to Market and there are likely loans tied to high risk Ventures such as Bitcoin. It is likely that the FDIC may have to rely upon borrowing money from the Federal Reserve or the US Treasury. If there are a cascading number of failures in the next few months, the FDIC will have to go borrow money.

since the beginning of the century, the FDIC has made depositors whole even the uninsured deposits. However if there is a Cascade of bank failures then the depositors will have to settle for a portion of their uninsured deposits.

[ConservativeInPA]

I'm reading this as there not might be, but THERE WILL BE, more bank fails soon (next week?).

It’s going to be an eff’n blood bath.

[SaveFerris]

GREATEST ECONOMY EVAH!!!

[House Atreides]

“ Backstopping deposits seems a lot less disruptive and less expensive than shutting down a bank.”
**********************************************************

You must be a fan of using “OTHER PEOPLE’S MONEY”.

[Recompennation]

Wasn’t it broncobama that bragged about ability to print money as if a magic trick. ??? Stupidity ingrained in repeating with expectation of results.

[Recompennation]

Funded by broncobama’s magic money muchine.

[Elsie]

Stroke of the pen - law of the land.

[Night Hides Not]

Thanks, Wallace. There's been a whole lot of disinformation being spread around here the past couple of days. The FDIC has multiple tools to raise cash. For example, back in 2009, the FDIC had banks prepay 5 years worth of deposit insurance. I'm sure numerous banks howled about it, but they still paid up.

I played a role in adding $11 million to the DIF, in one transaction. Investors were seeking a loan modification for their commercial property in Las Vegas. The note was held by a failed bank which was taken over by the FDIC.

The face value of the note was $40 million, and the investors put in a loan mod request at $17 million. My boss's boss asked me to evaluate their request, based on the financial statements and tax returns they provided.

I reviewed the file and assembled about ten questions for him to ask them. As he told me, they asked to modify their proposal, and bumped their proposal to $28 million. That was close to market value, based on current conditions. The loss on the original note was determined during the period the bank was resolved.

I even told my wife to quit listening to the doom and gloom, to trust the FDIC. When she countered my argument that I worked for them for 5 years, by reminding me she worked for Homeland Security for 35 years, I said we're talking apples and oranges. The FDIC has a reputation as a well run, professional agency, while Homeland Security...you get my drift.

I'm on their Ready Recall list, where I'd probably be rehired as a GS-14. I told my current employer I'm going nowhere, I'm on my "last rodeo", closer to 70 than 65.

[DannyTN]

An ounce of prevention is worth a pound of cure.

Or did your parents never teach you that?