Is The FDIC Broke? Recent Bank Failures Tax Reserves

dailykos.com:

When Colonial Bank failed on Friday, the 77th bank to fail this year, very few people noted that it was the largest bank failure of 2009. Even fewer people noted that the cost of cleaning it up required more capital resources than the FDIC had.

The total losses of Friday's five bank failures, according to the FDIC, would be $3.67 Billion. The problem is that the FDIC had less than $650 million in its Deposit Insurance Fund at the time.

Read the whole story: dailykos.com

Comments

[captaincrawley]

This from a recent article in Politico:

"After an August recess marked by raucous town halls, troubling polling data and widespread anecdotal evidence of a volatile electorate, the small universe of political analysts who closely follow House races is predicting moderate to heavy Democratic losses in 2010.

Some of the most prominent and respected handicappers can now envision an election in which Democrats suffer double-digit losses in the House — not enough to provide the 40 seats necessary to return the GOP to power but enough to put them within striking distance."

Read more: http://www.politico.com/news/stories/0809/26393.html#ixzz0Pmf3KNVr

Yep, we gave Obama a whole half year to fix the mess, time to again paralyze the government (which we all hate, anyway), and get back to the all-American corportocracy (not that it ever left).

[ElementalPraxis]

Big report from the FDIC is due out on 8/25.

"The FDIC is required by law to maintain a reserve ratio, or balance divided by insured deposits, of 1.15 percent. It was at 0.27 percent as of March 31. It could be near zero at the current moment."

Can't keep propping up those zombie banks forever.

[vippy]

I remember, the FDIC was nearly broke with the first one, INDYBANK, and then they upped the insurance from $ 100,000 to $ 250,000, which was curious. Now they are having trouble again.
Who is in charge of this?

[hill raiser]

middle class keep getting shafted. cash for clunkers only got 3 billion and canceled after just 3 months. This country needs more wel1fare and less R3aganism.

good articles: http://www.iamned.com

[themodernleader]

The Obama policy of relaxing Banking accounting rules was a coverup, an attempt to deceive the people of the alarming condition of American banking. Such dishonesty follows the massive fraud coverup bailout attempt that obligates our Treasury with 24 trillions of magic money. For What? Pay off bankers and investors all over the world.
Obama's fatal decision was to listen to Bernacke and Geithner and Summers. Those three miscreants knew that trying to undo massive fraud would endanger the American currency and economic system. But they persuaded a compliant and gullible President to pass fraudulently originated debt on to the government. Now as the bad obligations come due the Administration finds itself less able to wheel and deal, that is, borrrow more money.
One fact is inescapable: Meeting our illegal obligations will destroy our economic system.
This is the mess we find ourselves. Worse yet, we now have tens of millions unemployed with no prospect for a job. And tax revenues are shockingly short and getting shorter. And we have absolutely no thinking going forward for putting these citizens back to work. And monies for unemployment compensation is running out at the State and Federal levels.
It is a fair observation that Obama selected incompetent subordinates to deal with the greatest national crisis in our history. He must fire the entire bunch and start anew or face impeachment proceedings down the line---which is not too far away. Americans willl not tolerate dishonest and incompetent government together.

[sonofsamphm1c]

The rules were not relaxed. They were corrected. They were, as written, a gigantic F U.

[lightningbolt]

If Bush wasn't impeached for far graver crimes, Obama won't be impeached either, unless he has some sort of affair. The cover-up, accounting fraud, and looting of the treasury will continue until there is a revolution. Obama must fire Summers and Geithner who are misleading him into failure.

[vippy]

Obama is only following who dictates the rules, the FED, the Bilderberg's, etc.

[delta7777]

IMHO- Bernanke is a very smart guy, Summers and Geithner are financial industry tools. if Bernanke were partnered with other than the likes of these two, the economy might stand a chance.

[sonofsamphm1c]

My guess is Ben Bernanke, who worked with Geithner for several years, would profoundly disagree with you. Summers is brilliant. Bernanke is brilliant. They are strategic thinkers. Geithner is a tactician - an exceptionally good one. He attacked the huge glob of market instability with a thousand razor cuts, and he shredded it in less than 3 months.

[Maschine]

pffft....now that trillions have made it quite comfortably into our vernacular, whats a few billion

Start the printing presses, who cares, its all a sham.

[Cryostatic]

Sad, but true.

[sonofsamphm1c]

The vast majority of it is guarantees and borrowing authority - much of which is unused.

So basically, it ain't happened. You act like they printed the dollar bills and spent them. No wonder you're in such a tizzy.

Today they announced a large chunk of borrowing authority was probably not going to be needed, so they erased it from the deficit. And no, they didn't have to shred any printed money. No bank accounts had to be robbed.

[FaeKnight]

All of you that are trying to lay this at Obama's feet have amnesia.

This is a direct result of the repeal of the Glass-Steagall Act of 1933 by the Gramm-Leach-Bliley Act of 1999 (aka: Financial Services Modernization Act). Glass-Steagall was passed after the crash of 1929 to prevent it from happening again. It prohibited commercial banks from owning brokerages, thereby separating the activities of banks from securities. The banks had been trying to do this since Reagan.

Introduced in the Senate by Phil Gramm (R-TX)
Introduced in the House by Jim Leach (R-IA) with Thomas J Bliley, Jr. (R-VA) tagging on.

Gramm-Leach-Bliley was passed by the House 362-57 and by the Senate 90-8 (a veto proof majority) and was signed into law by Clinton Nov 19, 1999.

Ironically, Glass-Steagall also created the FDIC - the only part of the bill that Gramm-Leach-Bliley didn't repeal. Now it's bankrupt due to the repeal of the rest of the bill.

This Act combined with the Commodity Futures Modernization Act of 2000, (which deregulated Credit Default Swaps and the "Enron Loophole") have snowballed together to create the problems we are having now. Gramm, Leach and Bliley were co-sponsors of this Act.

[mrcontinental]

The GOP has amnesia concerning such things.

[RomeoMD25]

Our days as the dominant economic power are numbered. The dollar is going to collapse, and Americans are going to experience stagflation on an unprecedented scale in the form of recession and hyperinflation. Those of you who act smartly and quickly by taking measures..

[mrcontinental]

Time to bailout the FDIC!

Who didn't see this coming?

[Cryostatic]

What's that?

Sorry, thought I heard the sound of money being forcibly removed from my wallet.

[americaforme]

Wow! What a load of trouble to dump on the American people. If this is a dress rehersal for giving us a so sorry, no more Social Security. Then the Gov. better pay back all the funds they borrowed in the eightys, pony up! We cant tolerate freezing, and starving this winter. Get to work on all those off shore accounts, tax dogers. Stop the pork! Stop bailing out banks! Empty these corporations pockets that can dump all that money on congress men! Excuse me, I'm a nobody and I could cut across this crap in a heartbeat. Get health care now! Stop sending money to other countrys....

[Anthony Citrano - Huffpost Blogger]

Of course it is. I guess as usual I'm surprised people are surprised.

I covered it a year ago:
http://www.cosmictap.com/fdic-fright/

[sonofsamphm1c]

Yes, this is very old news. Baked in the pie. The FDIC fund was never intended to deal with a financial crisis of this size. That is why they already have borrowing authority - I believe for a few 100 billion.

They need that because nationalization of small banks adds up fast - especially given that is is FREE!

[jojony]

The FDIC will never go broke. Thats what the taxpayer is for.

[sonofsamphm1c]

Congratulations. You've figured it out. When they need your sons and daughters to go die for their country, they will confiscate them, too.

[Anthony Citrano - Huffpost Blogger]

Is the taxpayer "too big to fail", then?

[CaptainHowdy2]

Gold...

[sonofsamphm1c]

Lead.

[TheFriendlyAtheist]

Lead into gold...

[changeself]

borrow some from the banks at whatever rate they give you

so that the banks can turn enogh profit from the tax dollars.