It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
(visit the link for the full news article)
Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.
Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
is not really accurate because this action will not "rescue" failing banks -
That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
So which is it - "rescue" or "seize"? It will be the later.
Since January the F.D.I.C. has seized 94 failing banks, causing a rapid decline in the deposit insurance fund.
The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.
Bankers worry that a special assessment of $5 billion to $10 billion over the next six months would crimp their profits and could push a handful of banks into deeper financial trouble or even receivership. And any new borrowing from the Treasury would be construed as a taxpayer bailout that could open the industry to a political reaction, resulting in a wave of restrictions like fresh limits on executive pay.
The lending banks would receive bonds from the government at an interest rate that would be set by the Treasury secretary and ultimately would be paid by the rest of the industry. The bonds would be listed as an asset on the books of the banks.
Who would have thought that a government agency would actually contemplate paying the insured party for the coverage on their own risk?