It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Thank you.
Some features of ATS will be disabled while you continue to use an ad-blocker.
March 4 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.
“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.
“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”
Originally posted by Jay-in-AR
Note how the funds that become insolvent that are supposed to go to the little guy will just be allowed to collapse.
However, if the banksters stand to lose from something becoming insolvent, the Gov. will just use tax dollars to keep them propped up...
Really shows us where their priorities lie.
The Math
Now before doing the math on this also keep in mind our unemployment is higher now than it has been in nearly a generation; read if you don't have a job, you can't save. Also if 13% were under the poverty line in 2007, even more are now based on unemployment and poor people can't really save either.
Annual Income
$50,740
Average Tax Rate at 25% (Disposable Income Adjustment)
($12,685)
Total Disposable Income
$38,055
Current Average Savings Rate at 3%
$1,141.65
The Conclusion
We need to get rid of the FDIC along with the moral hazard it creates and we need to do it fast. Yes I said it, the FDIC needs to be gone and it creates a moral hazard in our system. Of course it's scary to think that your money in a bank isn't insured, but wouldn't that encourage banks to compete on solvency, make good loans, and remain well capitalized in order to attract more deposits? Wouldn't you be much more careful about who you decided to bank with and why if you couldn't rely on "required insurance"? Wouldn't it bring transparency to the system because banks would have to compete on their balance sheets rather than on their gimmicks?
Bair, Gray, the government, and the American people need to look in the mirror and face the facts. Simply put the real cost of keeping the FDIC is staggering to the tax paying public under the current economic environment. All in all what are we getting for having the insurance anyway? Miss Bair I have a question for you: What does the FDIC project the tax cost on $8.5 Trillion in bailout funds allocated to our banks by the US taxpayer to be? My guess is that it will be a lot more than $1,141.65 FDIC insured dollars.
And guess where they'll get those fees from? Depositors. Higher overdraft fees, higher checking fees, talk to the teller fees, ATM fees, card usage fees, account fees, etc. The mattress is getting cheaper.
Originally posted by tide88
Those banks can complain and send all the letters they want. The fact of the matter is if they do not pay those fees they will fail within a few days. I would pull my money out of a bank immediatley if they were not FDIC insured. So although the statement seems ominous, it will never happen. No bank in their right mind will not pay those higher fees.
Originally posted by David9176
No one's money is safe.
Might as well take it out while it's still worth something...but wait...can't do that...that will put a run on the bank and crash everything.
We're freakin screwed.
damnit
It's just not right man...WE DIDN'T DO ANYTHING TO DESERVE THIS!!!!
“Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today in testimony prepared for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.”
Note their unemployment number metrics are optimistic as pointed out in other threads.
Fed officials don’t see labor markets improving until 2011, when growth forecast at 3.8 percent to 5 percent reduces the unemployment rate to a range of 6.7 percent to 7.5 percent.
Originally posted by tide88
Those banks can complain and send all the letters they want. The fact of the matter is if they do not pay those fees they will fail within a few days. I would pull my money out of a bank immediatley if they were not FDIC insured. So although the statement seems ominous, it will never happen. No bank in their right mind will not pay those higher fees.