ARE YOU NEW HERE? NOT LOGGED IN? PLEASE TAKE A MOMENT TO REGISTER FOR AN ACCOUNT AND LOGIN TO REMOVE THIS WINDOW
Welcome to PatsFans.com. Do you have an account? If not - please take a moment to register for our forum and experience a much smoother experience with fewer ads, along with no longer having to see this notification window. Also learn about how you can receive a free Patriots T-Shirt from the Patriots Official ProShop by CLICKING HERE. Please enjoy your stay here, and Go Pats!
As the FDIC has had to step in to take over more and more insolvent banks, the fund has dwindled to dangerously low levels. At the same time, the number of problem banks continues to grow at a rapid pace.
At the end of the first quarter there were 305 'problem institutions' with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.
Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped. This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit.
The prospect of the FDIC paying back that loan anytime soon from increased assessments on the banks is extremely remote. This is simply a back-door bailout of the FDIC, structured as a line of credit so it does not increase the reported budget deficit.
Using the FDIC to backstop the PPIP program is simply a way to bypass Congress. There is no way that Congress could not have approved the line of credit and let the FDIC become insolvent. By all rights, the assessments on the banks should be raised to make up for the shortfall in the FDIC, but now is not exactly the time to do it, since it would simply deplete their capital at a time when they desperately need to improve their capital base.
I don't know how long FDIC is going to last when more banks fail every month. Very soon, the only bank which is still around is FDIC.
One nation = 1 BIG bank. Obama is going to send everybody a IOU letter IF FDIC fails. It's a scary thought.
Last edited by NEPatriot; 06-06-2009 at 12:59 PM..
DONATE TO PATSFANS.COM
RECEIVE A FREE PATS T-SHIRT AND SAVE 15% OFF WHEN YOU BUY FROM THE OFFICIAL PROSHOP!
Free T-Shirt & Save 15% Off!
Like Our Site? Please help support our site and server costs by DONATING TO PATSFANS.COM and receive a FREE PATRIOTS T-SHIRT and SAVE 15% off EVERY purchase you make from PatriotsProShop.com. You'll also receive added benefits to your account including Removing All Ads During Your Experience Here At Our Forum.
NEEDED YEARLY SITE DONATIONS: 345 | CURRENT # OF SUBSCRIBED SUPPORTERS: 98