"It Could Get Ugly Very Fast": Banking Crisis Grows, FDIC's Funds Shrink

Yahoo! Finance

The failure of some of the nation's largest banks in 2008, including Washington Mutual, Wachovia and IndyMac, and scores of smaller banks this year came at a price. The Federal Deposit Insurance Corporation's fund that insures the country's deposits now stands at $10.4 billion, down from $45.2 billion the prior year.

Jim Bianco, president of Bianco Research in Chicago doesn't believe depositors need worry, because the government has the power of the printing press to make good on FDIC insurance. But he is troubled. "As a taxpayer you should be concerned because this could be another potential drag and possibly a significant drag on the U.S. Treasury and bloat the already record federal deficit," he says, echoing a Wall Street Journal editorial on Tuesday, suggesting the FDIC may be the next entity in need of a bailout.

84 banks have failed this year, and the problem list of banks continues to grow, 416 as of the end of June. "They've got a bunch of huge open ended liabilities should the banking system continue to deteriorate and it could get ugly very, very fast for them," Bianco worries. As we learned during this banking crisis, these things can pick up steam in a hurry.

I smell government spokesperson. You NEED to be worried. People should get their money out of the bank, not in a rush but slowly. Because of the FDIC there hasnt been a run on the bank, but when it (FDIC) runs out of money. Watch out.

It most likely will. Have you seen the numbers on bad banks lately?

[edit on 9/2/2009 by Tentickles]

reply to post by Tentickles


Fed Minutes: Officials Saw Recession's End in August
finance.yahoo.com...

The officials seem to think the recession is over



What ARE they smoking?

reply to post by warrenb


I guess they figure they can milk it alittle longer before it all hits the fan.

If you are going to pull your money out of the bank, figure out what your going to do with it afterwards.

Then, pull the trigger (so to speak).

Once EVERYONE starts withdrawing funds, withdraws will be restricted to a few hundred per day per person. Days later, that bank (not that branch) will be out of business.

This party hasn't even begun.

Stay tuned.

Peace until War.

Great stuff as usual. Star and flag.

Does it make your brain hurt to try and figure out why the FDIC or anyone elses funds shrinking would worry us when the governnment will just hand them another big ol pile of the sweet smelling green stuff?

We've been handed piles too, but ours stick to the bottom of our shoes and don't smell so sweet.

Originally posted by Sundancer
Great stuff as usual. Star and flag.

Does it make your brain hurt to try and figure out why the FDIC or anyone elses funds shrinking would worry us when the governnment will just hand them another big ol pile of the sweet smelling green stuff?

We've been handed piles too, but ours stick to the bottom of our shoes and don't smell so sweet.

My brain hurts everyday I read these stories.

And hopefully public out cry will stop anymore bailouts and "stimulus." I say hopefully because it probably wont.

Deflation/Inflation here we come! (Not sure which one yet, numbers can be confusing on the subject.)

well...there has been an unusually large amount of insider sell-off of stocks by the executives of companies. they know something that we don't.

Can't be $10B in the bank. They're underwater if you add up the failed bank costs to the FDIC.

The FDIC started 2009 with $$17,276,000, and the total expected costs of the 84 failed banks this year is $21,857,400. Based on the FDIC under estimating 2008 losses at a 2.39 ratio, actual losses so far should be $52.2B, therefore the FDIC should be $35B in the red.

The FDIC started 2008 with $53B, estimated $12.6B in losses, but actual losses were $30.3B (a 2.39 ratio) with total losses of $35B.

Ref: FDIC Annual Report 2008 www.fdic.gov...
Look at Fund Balance Beginning and Fund Balance Ending.

Save the link here as an html file for the source of the image below.
files.abovetopsecret.com...

Here's an image.
[atsimg]http://files.abovetopsecret.com/images/member/93f5959cd5e4.jpg[/atsimg]

[edit on 3-9-2009 by Dbriefed]