Raping The Taxpayer Through Bank Closures

So far this year, there were 7 bank closures on Friday that brings the FDIC cost up to $9 billion.

The thing is, the FDIC goes in and covers the deposits, through the taxpayer, because they are out of money, and then the big bank comes in and buy the little bank at a fantastic price, because all the bank backed deposits are covered by the taxpayer.

It's the scam among scams.

www.marketwatch.com...

[edit on 1-5-2010 by 911stinks]

I was waiting to hear about something like this.
1 bank buying out others and the scam behind
it. Thanks for this thread

Not to be contrary, but it is my understanding the FDIC is funded by assessments of all FDIC insured banks. The FDIC also has an unlimited line of credit with the Fed. The FDIC does not utilize taxpayer money.

The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities

www.fdic.gov...

The assessments are pre-paid in advance of failure.

This 60 Minutes story depicts a last resort bank failure and how the FDIC kicks in. Granted it is roughly a year old but offers an unprecedented behind-the-scenes look. The FDIC Chairwoman offers keen insight when pressed hard. Many will find fault with their action, but their record of no bank customer losses due to failed banks remains intact. She discusses funding and unlimited line of credit with Treasury. She states no taxpayer funds are involved.



My .02¢


[edit on 1-5-2010 by kinda kurious]

reply to post by 911stinks


Read my location.

The large corporations and the banks head the list own this country and soon the world.

We, the common 9-5 person are simply servants to this organized system.

Until enough people wake up it and take action it will continue this way.

[edit on 1-5-2010 by ofhumandescent]

If the FDIC runs out of money, which it has, it goes to congress for funding.

market-ticker.denninger.net...

Please put the knives away, and stop putting "rape" in your post titles. That's two now - I'm not sarcastic! - cheers.

reply to post by 911stinks


I for one suggest we all start wearing skinny jeans. Then the government would be incapable of raping us.

Make that three recent posts.

Knives in headlines :

I believe over 1,000 people were murdered due to the actions of a UK national newspaper

www.abovetopsecret.com...

reply to post by 911stinks


BTW please note date of your article (11-24-09) before you comment on mine.

"We are carefully considering all our options, including borrowing from Treasury," Bair said, referring to the agency's $500-billion line of credit with the Treasury Department. She was speaking at a global finance conference in Washington.

But regulators are still reluctant to tap the line of credit because they want to avoid temporarily using taxpayer money to clean up the banking mess, she said.

www.reuters.com...

Yes, the debts are very scary in this country (primarily the private sector debt), but implying that the United States government is similar to Greece or could one day go bankrupt is entirely inaccurate and shows an extreme level of ignorance regarding the monetary system.

Source and current analysis here

Sorry, I just went through this with another recent doomer thread about a run on banks from a month ago that NEVER HAPPENED.

Admittedly, I am no financial expert but I had to conduct extensive research on FDIC recently to settle my late father's estate. It was dispersed without any snags and included some rather hefty payouts/transactions. Regards.



[edit on 1-5-2010 by kinda kurious]

The FDIC is NOT funded by taxpayer money. Period.

The FDIC is funded by bank assessments. The most recent assessments were completed at the end of 2009, and raised about $45 billion:

www.fdic.gov...

The FDIC has a $500 Billion Line of Credit with the Treasury to be used in an emergency if needed. This has already been authorized by Congress. The FDIC doesn't need to get approval from Congress to tap this Line of Credit.

Please get your facts straight before you post these misinformed lies, distortions, and misstatements of facts. Just because you read some gibberish on some conspiracy web site does not make it true.

The FDIC does a great service to American depositors by protecting deposits without using one penny of taxpayer money. When a bank fails, the FDIC steps in and makes sure that a depositor has access to their money. They're the good guys.

Quit spreading lies.

Originally posted by kinda kurious
She discusses funding and unlimited line of credit with Treasury. She states no taxpayer funds are involved.

An unlimited line of credit with the treasury, and no taxpayer funds being involved is a contradiction.

Tax payer money is used to pay down the treasury's debt.

However as long as it doesn't tap this line of credit, it is not costing the taxpayer money, and to my knowledge it has not yet tapped this line of credit.

Finally I think government insurance is an essential component of a fractional reserve banking system.

reply to post by scwizard


Thanks for the clarification. Your correction makes sense.

I misinterpreted her comments. Like I said, I'm no expert. Sorry I misspoke.

Originally posted by CookieMonster09
The FDIC is NOT funded by taxpayer money. Period.

The FDIC is funded by bank assessments. The most recent assessments were completed at the end of 2009, and raised about $45 billion:

www.fdic.gov...

The FDIC has a $500 Billion Line of Credit with the Treasury to be used in an emergency if needed. This has already been authorized by Congress. The FDIC doesn't need to get approval from Congress to tap this Line of Credit.

Please get your facts straight before you post these misinformed lies, distortions, and misstatements of facts. Just because you read some gibberish on some conspiracy web site does not make it true.

The FDIC does a great service to American depositors by protecting deposits without using one penny of taxpayer money. When a bank fails, the FDIC steps in and makes sure that a depositor has access to their money. They're the good guys.

Quit spreading lies.

Just curious, who do you think the treasury is. Are you so disassociated from mainstream that you don't realize the treasury is the American Peoples?

Today the Federal deposit Insurance Company released the latest quarterly banking profile. There is much information contained within this latest report and I will highlight the important parts for you here:

The most important revelation is that the Deposit Insurance Fund (DIF), the money available to pay back customers at failed banks, has dropped to a record low.

The Deposit Insurance Fund (DIF) decreased by $12.6 billion during the fourth quarter to a negative $20.9 billion (unaudited) primarily because of $17.8 billion in additional provisions for bank failures.

www.istockanalyst.com...

I was prepared for biased opinions, as this information is not wanting public scrutiny. It's a big bank / corporate takeover being enabled through the Basel II system.

[edit on 2-5-2010 by 911stinks]

An unlimited line of credit with the treasury, and no taxpayer funds being involved is a contradiction. Tax payer money is used to pay down the treasury's debt.

First and foremost, it is not an unlimited Line of Credit. It is currently set at $500 Billion - as determined by Congress. It has not been tapped.

The FDIC is funded by yearly assessments of banks. No taxpayer money and no Treasury money has been utilized.

Again, these are totally false allegations. If the FDIC needs additional funding, as it did in late 2009, it can charge another round of bank assessments.

Tapping the Line of Credit is not, at present, a politically viable alternative. Duh. Isn't that stating the obvious?

However as long as it doesn't tap this line of credit, it is not costing the taxpayer money, and to my knowledge it has not yet tapped this line of credit.

That is correct. The FDIC has never tapped the Line of Credit with the Treasury. It is not necessary to do so at present - All it has to do is tap the banks for another round of assessments.

The FDIC is self-funded by the banking industry through these assessments.

And, I might add, the FDIC is the one and only safeguard to protect depositors. Instead of lambasting them, people on this forum should be singing their accolades - especially given all of the banks that have failed recently. Pure idiocy.

Just curious, who do you think the treasury is. Are you so disassociated from mainstream that you don't realize the treasury is the American Peoples?

For the third time, I will repeat what I said before. The FDIC has never been funded by the taxpayers via the Line of Credit at the Treasury. Ever. Period.

The FDIC is funded by bank assessments. In recent news, some banks are starting to show significant profits - and significant liquid reserves:

www.fdic.gov...

"Payment of the prepaid assessment, along with the payment of institutions' regular third quarter assessment, will be due on December 30, 2009. The FDIC estimates that it will collect approximately $45 billion from total prepaid assessments. The payments will come from the industry's substantial liquid reserve balances, which as of June 30, totaled more than $1.3 trillion, or 22 percent more than a year ago."

Liquid reserve balances have increased 22% versus a year ago - There is a total of $1.3 trillion in the system which is more than enough to handle these bank failures for quite some time.

In layman's terms, the FDIC is in the hole by nearly $21 Billion, and it is very likely that they are tapping their $500 Billion credit agreement with the US.Treasury taxpayers.

Scaremongering idiocy. They have not tapped the Treasury Line of Credit! They assessed $45 billion in additional monies at the end of 2009. Lunacy.

If there is $403 Billion in assets recognized as being contained in problem banks, and the insurance fund is negative $21 Billion then where will the money come from to pay our insurance claims when these banks fail? Taxpayers, that's where.

Scaremongering. Baloney. The money to fund the FDIC will come from further bank assessments. I highly doubt they will tap the Treasury Line of Credit unless it's an absolute emergency - meaning they will have had to exhaust the $1.3 trillion in the liquid reserves in the banking system first. Taxpayers and Congress will expect no less than this.

Originally posted by CookieMonster09

An unlimited line of credit with the treasury, and no taxpayer funds being involved is a contradiction. Tax payer money is used to pay down the treasury's debt.

First and foremost, it is not an unlimited Line of Credit. It is currently set at $500 Billion - as determined by Congress. It has not been tapped.

To someone like me, 500 billion dollars of credit seems like an unlimited amount. Maybe if I was a congressman I wouldn't have misspoke.

They have not drawn on that line of credit. However if Bank of America wasn't bailed out, and Bank of America failed, they would have had to draw on that line of credit as Bank of America is responsible for 12.2% of the deposits of the United States. 523.38 billion dollars, which is an order of magnitude more than the deposit insurance fund balance.

[edit on 2-5-2010 by scwizard]

reply to post by CookieMonster09


An unlimited line of creadit with the treasury means tax payer money to be use at will.

The last time I check the tax payer means hard working Americans.

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. The FDIC insures deposits at 8,195 institutions.[2] The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receiverships (failed banks).

Insured institutions are required to place signs at their place of business stating that "deposits are backed by the full faith and credit of the United States Government."[3] Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.[4]

www.ask.com...







[edit on 2-5-2010 by marg6043]

reply to post by scwizard


Actually after the financial crisis and the toxic assets fall, the Treasury secretary with approval by congress gave the FDIC a blank check from the treasury department up to 1 trillion dollars that eventually will fall to the tax payer.

The name of the programs are Temporary Liquidity Guarantee Program and the Public-Private Investment Program.

www.fdic.gov...

www.financialstability.gov...

Originally posted by CookieMonster09
Tapping the Line of Credit is not, at present, a politically viable alternative. Duh. Isn't that stating the obvious?

2 years ago I couldn't possibly have imagined that a $700 billion TARP program and $1.9 trillion in escalating debt per year would be poltically viable either, but they happened. Sadly, my understanding of what is politically viable has been rudely downgraded since '08. Sometimes it seems like you can get away with anything these days.

Also, I don't think letting depositors lose their FDIC-guaranteed deposits would be "politically viable," either.

[edit on 5/2/10 by silent thunder]

To someone like me, 500 billion dollars of credit seems like an unlimited amount. Maybe if I was a congressman I wouldn't have misspoke.

Well, at least your honest enough to admit that you misspoke. Regardless, the Treasury Line of Credit is a last resort, emergency Line of Credit. The FDIC has never had to tap it - and, given the current reserves in the banking system - will not have to tap the Line of Credit.

To smear the FDIC when, in fact, it is the only government agency that has faithfully protected depositors when all these banks have failed - is just plain astounding.

Would you prefer your bank deposits to be uninsured? Is that what you want?

They have not drawn on that line of credit. However if Bank of America wasn't bailed out, and Bank of America failed, they would have had to draw on that line of credit as Bank of America is responsible for 12.2% of the deposits of the United States. 523.38 billion dollars, which is an order of magnitude more than the deposit insurance fund balance.

First, Bank of America did not fail. In fact, it repaid all of the TARP money with interest:

newsroom.bankofamerica.com...

To throw a hypothetical - "What If" - at this point is just pure scaremongering. BOA did not fail.

Even if the FDIC had to come up with $523 billion as you suggest, there is more than $1.3 trillion (read that again - $1.3 trillion dollars) of liquid reserves in the banking system that could be tapped for assessments. This is a 22% increase over a year ago. There is plenty of liquid reserves available to fund the FDIC through bank assessments - without ever having to tap the Treasury Line of Credit.

An unlimited line of creadit with the treasury means tax payer money to be use at will. The last time I check the tax payer means hard working Americans.

Again, I will repeat what I said before. The FDIC is funded strictly from bank assessments. The Treasury Line of Credit was set up by Congress as an emergency Line of Credit to be utilized in the most severe of circumstances.

Do you honestly believe that taxpayers are going to allow the FDIC to tap the Treasury Line of Credit?

I don't think it's politically possible right now, given the current hysteria in the media. Regardless, it is not necessary. There is enough liquidity in the banking system right now that the bank assessments are more than sufficient to fund the FDIC at the present.

The FDIC was set up after the Great Depression because depositors lost their life savings when banks failed. It's an arm of the federal government that works efficiently to protect Americans from bank failures. To date, the FDIC has never had a single depositor lose a single cent of their deposits from a failed bank.

But you go ahead - Bash the FDIC all you want with these lunatic allegations.

Actually after the financial crisis and the toxic assets fall, the Treasury secretary with approval by congress gave the FDIC a blank check from the treasury department up to 1 trillion dollars that eventually will fall to the tax payer. The name of the programs are Temporary Liquidity Guarantee Program and the Public-Private Investment Program.

Oh, yes, glad you brought up the PPIP. (The Temporary Liquidity Guarantee Program isn't worth even discussing - Many banks are not participating in the program.)

Two separate issues here. First, when a bank fails, it is the responsibility of the FDIC to make sure that depositors are protected. That's primary.

Secondarily: The PPIP - Public Private Investment Program - has to do with distressed real estate assets of banks. It involves 3 parties: the FDIC, the Federal Reserve, and private investors - Hence the term "Public-Private". Meaning the private sector is a participant, as well as the government. Not just the FDIC.

The program hasn't even gotten off the ground yet, because there are all kind of administrative and operational issues with the program:

www.bloomberg.com...

What does this mean? Huge problems. Many eligible real estate assets would become ineligible when the S & P downgrades these assets - S & P is saying about 90% of the assets would become ineligible.

Read this:

www.businessinsider.com...

Banking analyst Meridith Whitney argues that banks will not sell bad assets at fair market values because they are reluctant to take asset write-downs.

"The greatest unknown regarding the "bad bank" is at what price the government would pay for "toxic assets." If the government elects to pay fair market value, the banks will likely not elect to participate as capital hits would be too dear; however, if the government pays above market, the burden on an increasingly "taxed" taxpayer grows."

The most recent news? Hmmm...It appears that the FDIC isn't even participating:

www.bloomberg.com...

"To date, funds participating in the program have raised about $6 billion of equity capital from private investors, which the government has matched. The Treasury also provided $12 billion of debt capital, bringing the funds’ purchasing power to $24 billion."

But, go ahead, bash the FDIC all you want.




[edit on 2-5-2010 by CookieMonster09]