Bill Seeks to Let FDIC Borrow up to $500 Billion

[Rustler]

"WASHINGTON -- Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

The Connecticut Democrat's effort -- which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner -- would give the FDIC access to more money to rebuild its fund that insures consumers' deposits, which have been hard hit by a string of bank failures."


http://online.wsj.com/article/SB123630125365247061.html

Time for the Hamilton model for national banking and put the banks thru bankruptcy reorginization.

 

[StageLeft]

Nice, this is thus Part II

to what was mentioned a couple of days ago.

 

[winnar111]

People aren't going to deposit their money in banks if the insurance doesn't hold up, which would cost a whole host of problems.

At least its not handouts to deadbeats.

 

[Genx87]

They must be expecting people to require this as banks are about to fail, again.

 

[alchemize]

This is a confidence measure.

 

[dphantom]

Originally posted by: Genx87
They must be expecting people to require this as banks are about to fail, again.

I think the FDIC is getting ready to take over several more banks, larger banks and simply does not have the money to do so. Without this infusion and assuring people thier money is safe, there would be a massive run on the banks in no time and then we really would be in a depression.

What worries me is things are going to get a lot worse and I don't believe we are being told how bad the situation really is.

 

[StageLeft]

They must be expecting people to require this as banks are about to fail, again.

Undoubtedly. If you look at the numbers, this is magnitudes more than what is normally run through. This is not just business as usual.

Originally posted by: alchemize
This is a confidence measure.

Are you more confident after hearing it? Neither am I.

there would be a massive run on the banks

If this happens, make sure you're ahead of the curve. Savings accounts are offering meaningless returns now and safes at home depot are cheap.

 

[OrByte]

Originally posted by: dphantom

Originally posted by: Genx87
They must be expecting people to require this as banks are about to fail, again.

I think the FDIC is getting ready to take over several more banks, larger banks and simply does not have the money to do so. Without this infusion and assuring people thier money is safe, there would be a massive run on the banks in no time and then we really would be in a depression.

What worries me is things are going to get a lot worse and I don't believe we are being told how bad the situation really is.

couple this with the idea that I firmly believe in, and that is that there is NO WAY the FDIC nor the Fed didn't see this coming.

I might be letting my "conspiracy theory" side get the best of me, but I find it hard to believe that prior to all of the stimulus money being shelled out to the banks...that someone somewhere along the line didn't ask the simple question of whether or not the FDIC is equipped to move forward in this economy.

I just get the feeling that the Fed is being very shortsighted.

 

[Genx87]

Originally posted by: OrByte

Originally posted by: dphantom

Originally posted by: Genx87
They must be expecting people to require this as banks are about to fail, again.

I think the FDIC is getting ready to take over several more banks, larger banks and simply does not have the money to do so. Without this infusion and assuring people thier money is safe, there would be a massive run on the banks in no time and then we really would be in a depression.

What worries me is things are going to get a lot worse and I don't believe we are being told how bad the situation really is.

couple this with the idea that I firmly believe in, and that is that there is NO WAY the FDIC nor the Fed didn't see this coming.

I might be letting my "conspiracy theory" side get the best of me, but I find it hard to believe that prior to all of the stimulus money being shelled out to the banks...that someone somewhere along the line didn't ask the simple question of whether or not the FDIC is equipped to move forward in this economy.

I just get the feeling that the Fed is being very shortsighted.

I am starting to question if this isnt a calculated move by someone or a group of people. Think of all the power one can grab should our financial system melt down and people panic?

I am not one to be a tin foil hat kind of guy. But look who instantly gets money and who is helping them. As well it would be interesting to see how many of leaders in govt and the banking industry come from the same circles. Harvard and Yale.

 

[dphantom]

Originally posted by: OrByte

Originally posted by: dphantom

Originally posted by: Genx87
They must be expecting people to require this as banks are about to fail, again.

I think the FDIC is getting ready to take over several more banks, larger banks and simply does not have the money to do so. Without this infusion and assuring people thier money is safe, there would be a massive run on the banks in no time and then we really would be in a depression.

What worries me is things are going to get a lot worse and I don't believe we are being told how bad the situation really is.

couple this with the idea that I firmly believe in, and that is that there is NO WAY the FDIC nor the Fed didn't see this coming.

I might be letting my "conspiracy theory" side get the best of me, but I find it hard to believe that prior to all of the stimulus money being shelled out to the banks...that someone somewhere along the line didn't ask the simple question of whether or not the FDIC is equipped to move forward in this economy.

I just get the feeling that the Fed is being very shortsighted.

IMO, the Fed is reacting because they have no clue how to fix this. I don't either, but these are the people we expect to know how to work with our financial system and AFAIK, they are as lost as I am.

 

[Jaskalas]

Originally posted by: Genx87
They must be expecting people to require this as banks are about to fail, again.

Without this money in the hands of the FDIC, people will use their fear of the FDIC's insolvency to make a run on the banks. It?s a self fulfilling prophecy unless people?s fears can be calmed.

 

[StageLeft]

Originally posted by: dphantom
IMO, the Fed is reacting because they have no clue how to fix this. I don't either, but these are the people we expect to know how to work with our financial system and AFAIK, they are as lost as I am.

I lean toward this over Genx. I don't think the government is smart enough to have this a conspiracy that is being hidden or some group of people. Even the richest people in the world are losing some money here (e.g. Warren Buffet). There is no conspiracy that I see, just the unwinding of wanton, unadulterated, reckless avarice.

Without this money in the hands of the FDIC, people will use their fear of the FDIC's insolvency to make a run on the banks. It?s a self fulfilling prophecy unless people?s fears can be calmed.

I sent a friend the link two days ago he said most of his money was already in his safe. I was thinking, at what point would I take my money out? What would the next sign be?

 

[StageLeft]

60 minutes just had a bit about the FDIC and an interview with Bair, the head. I liked something she said. I've been asking for months why a country would have businesses that, if they go belly up, pose a major catastrophe to the country--i.e. they are too big to fail. She brought up the idea that in the future the government may have to look into limiting companies' size. Sweet.

Also another thing she said their projections for losses over the next five years are $65B. Does anybody have any idea why this legislation gives them almost 8 times as much as they are claiming to project to need for the next five years? Anybody? Bueller?

BTW she also said, per the other FDIC thread, that the FDIC is fully backed by the US gov so it's effectively impossible for it to actually run out of money; the gov would print it to cover losses [my input; she didn't say "print"]if it had to.

 

[LegendKiller]

Originally posted by: Skoorb
60 minutes just had a bit about the FDIC and an interview with Bair, the head. I liked something she said. I've been asking for months why a country would have businesses that, if they go belly up, pose a major catastrophe to the country--i.e. they are too big to fail. She brought up the idea that in the future the government may have to look into limiting companies' size. Sweet.

Also another thing she said their projections for losses over the next five years are $65B. Does anybody have any idea why this legislation gives them almost 8 times as much as they are claiming to project to need for the next five years? Anybody? Bueller?

BTW she also said, per the other FDIC thread, that the FDIC is fully backed by the US gov so it's effectively impossible for it to actually run out of money; the gov would print it to cover losses [my input; she didn't say "print"]if it had to.

I would agree that we need to limit the size of these companies. By and large, they were only limited before based upon the size of their deposits (IIRC, 10% of nationwide deposits is max), but since they could take on huge amounts of leverage (both on BS and off), deposits didn't matter all that much.

It's obvious our prior metric of "size" is no longer relevant.

I guess my post about the new credit line being a "just in case" was true and I wasn't really countering what she said, eh? You can say your sorry at any time for carrying out a vendetta for no reason.

 

[StageLeft]

Originally posted by: LegendKiller
I guess my post about the new credit line being a "just in case" was true and I wasn't really countering what she said, eh? You can say your sorry at any time for carrying out a vendetta for no reason.

What a strange thing to say. You said, in reference to Bair, when saying that the FDIC could dry up this year that it was "Pretty silly for her to say that" and yet when two days later it turns out that gov is looking to extend up to $500B (many multiples above what FDIC typicaly throws out in a year) you are still pretending you were not made a fool? It's ok, we all get things wrong, but only the real fools can't admit it *cough* boon for the world *cough*. In the immortal and inebriated words you wrote last night--I will address that tomorrow, when the affects of liquor aren't affecting my brain.--we are forced to wonder if you are an alcoholic, as your rubbish spews forth at all hours of the day.

 

[Hacp]

Originally posted by: Skoorb

They must be expecting people to require this as banks are about to fail, again.

Undoubtedly. If you look at the numbers, this is magnitudes more than what is normally run through. This is not just business as usual.

Originally posted by: alchemize
This is a confidence measure.

Are you more confident after hearing it? Neither am I.

there would be a massive run on the banks

If this happens, make sure you're ahead of the curve. Savings accounts are offering meaningless returns now and safes at home depot are cheap.

I'm going to stock up on gold, canned food, and rechargeable batteries. Those will go for a premium when the Great Depression II hits.

 

[LegendKiller]

Originally posted by: Skoorb

Originally posted by: LegendKiller
I guess my post about the new credit line being a "just in case" was true and I wasn't really countering what she said, eh? You can say your sorry at any time for carrying out a vendetta for no reason.

What a strange thing to say. You said, in reference to Bair, when saying that the FDIC could dry up this year that it was "Pretty silly for her to say that" and yet when two days later it turns out that gov is looking to extend up to $500B (many multiples above what FDIC typicaly throws out in a year) you are still pretending you were not made a fool? It's ok, we all get things wrong, but only the real fools can't admit it *cough* boon for the world *cough*. In the immortal and inebriated words you wrote last night--I will address that tomorrow, when the affects of liquor aren't affecting my brain.--we are forced to wonder if you are an alcoholic, as your rubbish spews forth at all hours of the day.

ROFL. Are you serious? Are you really that desperate and pathetic of a person that you have to devolve it into such tripe, trolling, and bullshit?

It is blatantly obvious you've got nothing else to argue from so you have to resort to this gutter garbage. I won't even respond to any more of your posts as you aren't worth my time.

The 500bn is an insurance policy. People buy them all of the time for rare events. She admitted she doesn't need it and it was blatantly obvious she doesn't in any normal circumstance. The basic fact that you ignore logic just shows how utterly desperate and insecure you are.

 

[miketheidiot]

skoorb has recently taken a turn down wingnut avenue.

as far as the bailout goes, i woudl say its been a stunning success, considering how well its down to mitigate the alternative. Things aren't great, but its nice not to be staring out of the abyss anymore.

 

[sportage]

60 minutes had a good seg on this FDIC thing, Sunday.
The FDIC figures they will need to take over not just a few more, but many many more, and soon. They claim they can not take over citi because its not a "bank", but a mass of financial institutions with foreign involvement/investment.
As the FDIC head stated, the US gov should NOT allow these banks to grow so large and massive, like citi has, so that the FDIC can not come in to help. Thus you have the US gov bailout via tax dollars as the only option, other than failure.

A failing bank would be easy for the fdic to take over. Something like citi is way too massive, and only your tax dollars and the us gov can step in with a bailout.
The FDIC head said she believed banks like citi should be allowed to simply "FAIL", thus removing these massive financial monsters from the equation.
She is right!!!

The us gov needs then to limit the size that these financial institutions can become.
Limiting in that YOUR tax dollars will not have to be raided again and again in the future.

Sounds like she is saying banks like citi are simply a big black hole, ready to gobble up bailout money. So citi should be allowed to just fail.

The fdic gets its funding not from taxpayers, but from insurance premiums.
So I ask how does a company like AIG figure in with the fdic???
Maybe that is why AIG continues to get bailout money.
Could it be if AIG fails, then the fdic comes closer to failing too?

She claimed the fdic can not and will not fail due to the way they are funded. And they also have the backup of borrowing from the us gov, if needed.

All I can add is... if the fdic runs out of money or fails in itself, there would NOT be a run on the banks.
You would not get the chance.
All the banks would be closed before the news was released.

 

[StageLeft]

Originally posted by: miketheidiot
skoorb has recently taken a turn down wingnut avenue.

as far as the bailout goes, i woudl say its been a stunning success, considering how well its down to mitigate the alternative. Things aren't great, but its nice not to be staring out of the abyss anymore.

How do you know this, though? It's pure conjecture. Without an effective way to quantify its effects you cannot really say it's been any more effective than me doing 15 jumping jacks every morning. And of course far more people are talking of a depression than when the bailout first went through, so if that's not staring into the abyss, I'm not sure what is.

Considering the world bank has declared this will be the first time in WWII that the global economy is to shrink and that the stock market--a confidence gauge by investors--has continued to plummet, and that the US government continues to throw money down a black hole and that England (only the first, for now) has now resorted to printing money, I have to say "stunning success" not found.

I won't even respond to any more of your posts as you aren't worth my time.

Thank God! More time for you to drown your sorrows in the bottle. :beer:

 

[imported_K3N]

Im gonna try to buy a safe today, anyone know the typical cost of a safe?

 

[StageLeft]

Originally posted by: K3N
Im gonna try to buy a safe today, anyone know the typical cost of a safe?

A real safe that can be drilled into a concrete floor or similar starts at about $110 or so and they just fly on up from there depending on what you want. You should get a waterproof one, as a house fire will be dealt with by huge volumes of water. The problem with a safe is that it can also become a target, unless you get a true behemoth that's built like a tank. Thus it may be worth using a safety deposit box for valuables or a tinier lock box hidden somewhere.

 

[StageLeft]

Link

More talk about possibly letting some big banks go. I have heard more of this particularly from Republicans in Congress.

So how much would a shutdown of Citi or BofA, which had worldwide deposits of $774.2 billion and $893 billion as of the end of last year, cost the FDIC?...And fears of such a big failure could be one reason why Senate Banking Committee chair, Chris Dodd, D-Conn, and Sen. Mike Crapo, R-Idaho, proposed a bill last week that would let the FDIC temporarily borrow up to $500 billion from the government to keep the deposit insurance fund solvent.

If you read the rest of the article the math works out quite nicely. The $500B would about cover the failure of one of these banks. No way really to tell if gov thinks this is a good chance of happening or if merely a hedge in case public uproar forces their hand.