The Bush Financial and Economic Bust of 2008 - The Destruction of Capital

[Crewleader]

Feb 07, 2008 - 08:33 PM

By: Mike_Whitney




On January 14, 2008 the FDIC web site began posting the rules for reimbursing depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC) is required to “determine the total insured amount for each depositor....as of the day of the failure” and return their money as quickly as possible. The agency is “modernizing its current business processes and procedures for determining deposit insurance coverage in the event of a failure of one of the largest insured depository institutions.” ( http://www.fdic.gov/news/news/financial/2008/fil08002.html#body )

The implication is clear, the FDIC has begun the “death watch” on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible.

Good luck.

It's worth noting that, due to a rule change by Congress in 1991, the FDIC is now required to use “the least costly transaction when dealing with a troubled bank. The FDIC won't reimburse uninsured depositors if it means increasing the loss to the deposit insurance fund....As a result, uninsured depositors are protected only if a bank acquiring the failed bank will pay more for all of the deposits than it would for insured deposits only.” (MarketWatch)

Great. That's reassuring. And there's more, too. FDIC Chairman Shiela Bair warned that “as of Sept. 30, there were 65 institutions with assets of $18.5 billion on its list of "problem" institutions;” although she wouldn't give names.

http://www.marketoracle.co.uk/Article3643.html

[Ichingcarpenter]

1. kick and nominated.

I have the same story in the editorial section
I have added other data on that thread

[eilen]

2. Good thing windows on modern skyscrapers don't open.

I think it all started during the Nixon administration when we waved goodbye to the gold standard. Once our money wasn't backed up by anything of REAL value we were on the wayward path.

[Warpy]

5. I think it was when Kennedy got conned into lowering the

top marginal rate on plutocrats to 70%, a move I think he might have had the wisdom to regret had he lived.

That started them on the way to selling supply side snake oil, buying the media and Congress, and destroying the protections of the New Deal.

Without all that new play money to spring him, the genie might have stayed corked inside that bottle, unable to do mischief.

[FirstLight]

3. ...and yet another

...just when you think things can't get worse... ack... Best bet is to get ready for the barter system again. Money wil be worthless...

[Adsos Letter]

4. Thankyou Crewleader...

for, once again, taking the time to keep us informed on important occurances which people like me would not otherwise get.

:applaud:

[guruoo]

6. k&r

[nightrider767]

7. More good news for Wall street n/t

[lligrd]

8. Kick And Rec

To ensure that the few that have savings know.