So shoot me....I'm concerned! (FDIC)

[CoffeeCat]

Something caught my eye a few weeks ago, when Washington Mutual failed nearly
a month ago.

In a "Washington Post" article, "Washington Mutual's Rating Cut to Junk"--this
paragraph left me wondering...

"The cost to the FDIC if this company fails is likely to be quite high," analyst
Rich X. Bove of Ladenburg Thalmann wrote. He estimates the net cost to the FDIC at
$24 billion, which is about half of the assets in the FDIC's insurance fund.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091503035.html

Ok, so one bank failure siphons off half of the FDIC's money? The
article states that if the FDIC reserves are depleted, "The FDIC might just have to borrow
money from the Treasury Department to meet its obligations to depositors."

So, how quick would the Treasury Department move to get our money to us...as fast as they're
implementing the particulars of this bailout? :eyes:

I realize that Washington Mutual was a huge financial institution, and its demise
was one of the largest bank failures in US history.

However, I fail to see how our bank deposits are safe, if one large bank failure
can eat up half of those FDIC funds. Yes, the FDIC says that all deposit are insured
up to 100,000, but isn't that a moot point if half of the FDIC assets can be depleted
with one large bank failure.

I'm not freaking out, or buying duct tape--but I do think this is worth exploring
and discussing.

[Eurobabe]

1. They'll just buy more printing presses for the Treasury

those suckers are running 24/7 now anyway. :shrug:

[Critters2]

3. Yep. Just more money with nothing to back it.

It's just paper, after all. :scared:

[endthewar]

17. Inflation is a regressive tax though

Perfectly in line with Republican trickle-down philosophy. They know what they're doing and they're doing it on purpose. Bush is determined to win his war on the middle-class.

[Kartius]

2. The US gov't will bailout the FDIC

You will get your money back at some point. Whether it will be worth anything is another matter.

[Mind_your_head]

5. True - and the 'dog and pony show' will go on, won't it? n/t

[dkf]

4. JPMorgan took all of Washington Mutual's banks

and left the FDIC with no obligation.

If the FDIC runs out of money they will take a loan from the treasury.

We will probably see higher FDIC insurance costs for the banks.

[Aqaba]

6. If you thought WaMu was big, just wait til Citi capitulates

What we've seen this weekend was that Europe and the US have basically stepped in and said to their banks, "MONEY HERE".

At this point, the FDIC balance is a minor distraction. They will get the funds they need for whatever. There are far larger things happening.

I really think this is unprecedented territory. The global economy basically created mountains of gold based on mortgage-backed-securities, spiralled that into untold trillions of debt and obligations, and now their cards are being forced on the table.

I don't know. I really don't know what will happen. I highly suspect that the main outcome of all of this is the USA falling from grace as a superpower. A superpower with military all over the planet.

Blah.

[CoffeeCat]

10. Is your assessment of this....

...mess based on problems with the credit markets?

When you mentioned "There are far larger things happening" were you talking about the frozen credit markets?

When money can't move between businesses or banks--that seems...catastrophic.

This will all be very interesting.

From what I'm hearing--many expect a rally on Wall Street-then a major fall. That sounds about right
to me. But what do I know...I don't own a crystal ball. However, many who called this current situation,
are calling for a short-term rally and then a major crash.

Yes, I imagine we will be demoted from 'superpower' to 'hated power.' Other economies bank on the notion
that the US will make rational financial decisions. Nope. Sorry...that ended long ago. Many countries
will hate us, that's for sure.

[Aqaba]

13. Hated power

This has been a process of decades of our own special interventionism, whether militarily (covert or overt) or economically (re: Confessions of an economic hitman).

All done whilst hoisting ourselves upon our own petard, so to speak. We've been lying to ourselves whilst buying houses and SUV's on incomes that do not actually afford that, all while making war on the Middle East and Asia. Funded by George Walker Fucking Bush's tax cuts. Whilst convincing the greater populace to hate Muslims and brown people in general.

I really think that the world is so pissed at us, even with their complicit and nefarious shenanigans with our bullshit financial dealings, that they are completely ready to give us the "GO FUCK YOURSELF AND DIE" finger. Huckabee recently raised the question of 'financial terrorism'. Blah.

When I mentioned that 'far larger things are happening', I was suggesting that the entire global banking/finance system is currently undergoing abrupt and geopolitical change, a change that will leave us as a debtor nation, as opposed to the nation who holds the most valued currency, 10+ trillion in debt. With the biggest, most deployed military on the planet.

Its a fucking hairy situation, I am not pleased.

[zeos3]

7. I read something about this a while back

I'm a little fuzzy on the details though. It had something to do with the FDIC not being required to hold all the capital that would be required to pay out, should something go wrong (??). It may have been something about the banks not being required to pay the full premium to insure the deposits (like I said, it's fuzzy to me).

I'll see if I can find it and post later. I'm pretty sure the author's advice was something like "you should hope your bank is among the first to go under so the FDIC will have the money to cover your account(s)"

[man4allcats]

8. Personally, I think you should freak out.

Then again, I don't know anything about finance. I have no money so I can't lose any. I just think all these people are idiots. When you deal with crooks, you get fucked. It's that simple. Best of luck.

[TexasObserver]

9. It's not really a worry. If the FDIC doesn't pay when called upon, it's all over.

[CoffeeCat]

11. That's just GREAT!

How am I supposed to fund my daily trips to Walmart to buy Chinese trinkets using my 21-percent-interest Mastercard?

This country never lets me do anything!

[TexasObserver]

12. I mean the government will always fund the FDIC, and if it can't, chaos will reign.

[Mind_your_head]

14. Bingo! n/t

[zeos3]

15. Here's an article that won't make you feel better

The fund, which is marking its 75th anniversary this year with a "Face Your Finances" campaign, is at $45.2 billion — the lowest level since 2003. At the same time, the number of troubled banks is at a five-year high.

FDIC Chairman Sheila Bair has not ruled out the possibility of going to the Treasury for a short-term loan at some point. But she has said she does not expect the FDIC to take the more drastic action of using a separate $30 billion credit line with Treasury — something that has never been done.

The FDIC's fund is currently below the minimum set by Congress in a 2006 law. The failure of IndyMac Bank in July cost $8.9 billion.

http://news.yahoo.com/s/ap/bank_deposits_safety;_ylt=Aj74.j2EMDo1U4UJCtCfnZ5v24cA

[Journeyman]

16. The Mafia's known how to handle this for decades: The best way to make money. . .

is to make money!

I'm sure the government has the particulars worked out well in advance. You'll have your money just as soon as they print it.