FDIC may run out of money......

[Scout26]

Oh Goody,  Depression here we come......

Let's start a run on the banks.....

Anything else you clowns want to do to kill the economy ??

http://news.yahoo.com/s/ap/20090304/ap_on_bi_ge/fdic_bank_fund_warning

FDIC's Bair warns on bank deposit insurance fund

By MARCY GORDON, AP Business Writer Marcy Gordon, Ap Business Writer – Wed Mar 4, 12:57 pm ET
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.

The industry, especially smaller community banks, has said the new insurance fees will place an extra burden on an already struggling sector. A federal banking regulator said last week the new premiums will unfairly burden smaller banks that didn't contribute to the financial crisis with reckless lending.

As loan defaults have soared, reflecting the ravages of rising unemployment and sliding home prices, bank failures have cascaded and sapped billions out of the fund that insures regular accounts up to $250,000. The fund now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The FDIC now expects that bank failures will cost the insurance fund around $65 billion through 2013, up from an earlier estimate of $40 billion. There have been 16 bank collapses already this year, following 25 in 2008 — which included two of the biggest savings and loans, Washington Mutual Inc. and IndyMac Bank.

The new insurance fees are meant to raise $27 billion this year to replenish the fund.

Bair said the plan protects bank depositors as well as taxpayers, because it likely means the FDIC won't have to go to the Treasury Department and tap public money to replenish the insurance fund.

Bair has not ruled out that possibility for a short-term loan, but said she doesn't expect to take the more drastic action of using its $30 billion long-term credit line with Treasury — something that has never been done.

"Some have suggested that we should turn to taxpayers for funding," she said in her letter to the bank executives. "But banks — not taxpayers — are expected to fund the system, and I believe Congress would look skeptically on such a course of action."

Furthermore, she said, turning to taxpayers "could open up a whole new debate about the degree of government involvement in the affairs of insured banks."

The FDIC plan puts new charges on a battered industry while the Obama administration is seeking to pump as much as $750 billion in additional federal aid into ailing banks under its financial rescue plan. The FDIC, as a regulatory agency charged with protecting the insurance fund, acts independently from the administration.

The new emergency premium, to be collected from all federally insured institutions on Sept. 30, will be 20 cents for every $100 of their insured deposits. That compares with an average premium of 6.3 cents paid by banks and thrifts last year.

The FDIC also raised the regular insurance premiums for banks to between 12 and 16 cents for every $100 in deposits starting in April, up from a range of 12 to 14 cents.

Also didn't we just give the banks a big chunk of the ~$750 billion TARP money ??  Should we have just given some of that to the FDIC......

[AZRedhawk44]

http://www.foxnews.com/politics/2009/03/05/senate-moves-loan-fdic-billion/

The Senate is moving to make $500 Billion available from Treasury to cover FDIC.

Where is Treasury getting this money?

Hint:  Another name for fancy dishes.

[HankB]

Fed.gov will NOT allow FDIC to default, any more than they'd default on Treasury bills or savings bonds. Such a move would prompt a violent reaction - I mean, a pitchforks and torches at midnight type of a reaction - as it would completely delegitimize the government in the eyes of MOST people. (Including many government employees.)

They might rev up the printing presses and pay off everything with inflation-devalued currency, but they will not allow an actual default.

[Standing Wolf]

They might rev up the printing presses and pay off everything with inflation-devalued currency, but they will not allow an actual default.

"Might?"

[lone_gunman]

Some have suggested that we should turn to taxpayers for funding," she said in her letter to the bank executives. "But banks — not taxpayers — are expected to fund the system, and I believe Congress would look skeptically on such a course of action."

This woman is clearly living in some past historical era, and apparently hasn't noticed we are now a democratic socialism.  If auto makers, insurance companies, and banks can get money from taxpayers, why can't the FDIC?

I say turn on the presses, and print her some money.

[Manedwolf]

How come when they print extra money, it's an emergency bailout or a stimulus and is applauded, but if I were to try to print some extra money, I would be swarmed by treasury agents?

[Monkeyleg]

How come when they print extra money, it's an emergency bailout or a stimulus and is applauded, but if I were to try to print some extra money, I would be swarmed by treasury agents?

Because the money you would print wouldn't be backed by the full faith and credit of the US government (which now means that your money would be worth about the same).

[Manedwolf]

Because the money you would print wouldn't be backed by the full faith and credit of the US government (which now means that your money would be worth about the same).

About right! :)

When do we lose our AAA, I wonder?

[Headless Thompson Gunner]

About right! :)

When do we lose our AAA, I wonder?

When FedGov loses he ability to tax the most powerful economy in the world.

[Headless Thompson Gunner]

I wouldn't put too much credence in the FDIC claiming that we need to give more money to FDIC or else calamity will ensue.  It's the same tired argument used by governments and government agencies all the time, threaten some calamity if we don't agree to giving more money.

"We need to pass this expensive budget bill or else the federal government will shut down."

"We need to allocate more money for the police department or else we'll have to take cops and squad cars off the streets."

"We need higher taxes or else we won't be able to give everyone their tax refunds."

"We need higher taxes or else we'll have to lay off all of the teachers."

"We need to let FDIC levy this huge new assessment on banks or else the deposit insurance won't work."

Rarely are these arguments actually true.  They're nothing but a disingenuous ploy to fleece the taxpayers.

[K Frame]

Politics...

Things directly related to those who are pursuing elected offices, the actions of those in an elected office, or activities of those individuals that might impact on their duties or aspirations as elected officials.