Who guarantees the FDIC?

[tridim]

Chucklenuts is up there telling me it'll all be okay if my bank closes because I'm insured by the Government. Forgive me if I don't have confidence in this man, but where will that insured money come from? His ass?

[slackmaster]

1. We all do, in the end

:nuke:

[Psephos]

2. You and me

or, to be more precise, the "full faith and credit of the United States Treasury."

Treasury Bonds are still rated AAA (highest category) by the bond rating agencies, which translates into at least a year's worth of GDP borrowing power (that's more than $10 trillion). The FDIC, which insures your deposits to 100K (and at least partially insures them beyond 100K) will not run out of money.

That doesn't mean this isn't a giant mess. It is.

[tridim]

3. So the FDIC account is equal to all the insured bank accounts in America?

I'm not talking about IOU's and paper, I'm talking about real cash. If 200 banks failed tomorrow what would happen? If they send out checks, can I cash it it my failed bank? If not, where do I cash it?

See what I'm getting at?

[PA Democrat]

8. Member banks pay dues to get insurance. The FDIC has an insurance fund totaling more than $49

billion, but insures more than $3 trillion of deposits in U.S. banks and thrifts. So, you can do the math. I think I read somewhere that if say 10 of the largest banks failed, the FDIC's insurance fund would be exhausted. I'm sure that the federal government would step in just like they did during the S&L crisis back in the late 80s.

Some info on the FDIC here:

http://www.fdic.gov/about/learn/symbol/index.html

[Psephos]

9. Let's put it another way

If the US Treasury should prove insufficient to back a banking meltdown, then your cash is worthless anyway.

The bailout of IndyBank will cost about $6-8 billion. That's approximately the bottled water bill for a week in Iraq. (OK, being a bit facetious here.) Chump change.

The chance that 200 banks will go down, based on an aggregate assets to deposits analysis, is less than the chance that you are going to die from a lightning strike or from drowning in your bathtub. Reserve ratios (assets vs. deposits) provide a way to calculate that risk, and that's what the data currently show.

Bank runs are a mass panic phenomenon. Once people understand that the government is dead serious about preventing collapse of the financial system, and see that failed banks are mopped up as promised, the panic subsides as the emotion that drives it cools.

Here are some useful links:

Check out your bank or credit union at the following links to make sure they are insured, and examine their financial statements and ratio reports, which give a good idea of their health. First, get their FDIC/NCUA number:

NCUA credit union
http://webapps.ncua.gov/ncuafpr/OnlineFPR.aspx?cu_number=

FDIC bank
http://www4.fdic.gov/IDASP/main_bankfind.asp

Now, use BankRate.com's Safe & Sound ratings to figure out how your bank fares. The analyses are based on actual call report data.
http://www.bankrate.com/brm/safesound/ss_home.asp

You might try a read of this seminal book, too, for a way to replace emotions with reason when trying to understand market swings and what drives them:
http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0767923634/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1216134825&sr=8-1

[fasttense]

4. The little guy pays all the bills in the end.

The rich idiots hauling in their money during the sub-prime crime spree get bailed out by the middle class and poor. The uber wealthy elite pay very few taxes, just ask Warren Buffet who pays most of the the taxes. So the idiot in chief is telling you to pay yourself and his billionaire cronies too.

[sinkingfeeling]

5. FDIC has $53 billion to cover banking losses.

[indepat]

6. Me thinks the FDIC insurance will be as good as money in the bank as long as the Federal government

can/is willing to meet its obligations. On that, I'm making no bets for we are rapidly spiraling into the 'puke/junior paradigm and where it takes us is any body's guess, but I saw the EURO running across the ticker this morning at over 1.60 to the dollar and I've never seen that before. Much of what is happening had it's genesis in the Gipper's voodoo trickle-down economics which was continued by GHWB and by junior with gusto and relish giving us an approximate eight-fold increase in the Federal debt in little over a quarter century. But at least we know we are safe from terra, so happy sailing and brace for a hard landing. :D

[screembloodymurder]

7. The US $ and your $100,000 in the bank will be worth $50,000 very soon.

The FDIC won't guarantee your purchasing power.