Bair Says [FDIC] Insurance Fund Could Be Insolvent This Year

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.”

Full story

SO now that they increased the levels to $250K, they may not be able to get your money back to you at all.

Back when the S&L fiasco happened, it took about 6 months (sometimes longer) to recover your money from FDIC if the bank you used failed.

Now you may not get it at all. And they are publicly warning you, so you can't say you didn't know.

This goes for ANY FDIC insured deposit, checking, savings, CDs, IRAs, 401Ks.

If you have been thinking about the safety of your money, it's time to decide what you are going to do. If you haven't thought about it, you need to.

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.

reply to post by redhatty


I heard about this today red.

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!!!!

S&F

[edit on 4-3-2009 by David9176]

Are they trying to "create" a run on the banks?

Seriously the rumor mill has gotten us into a depression before, this looks like history repeating itself but this time perpetuated by the FDIC.

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.

Um, Jay, you realize that ANY .gov organization uses tax payer money to do what it does, right?

So even if the FDIC covers the accounts on a failed bank, it's still the taxpayer's money that pays for it.

But I do understand what you are saying - banks are left running while the "little people" are falling under the wheels of the train.

And it isn't right.

reply to post by elston


rumor mill??

This is the Chairman of the FDIC saying it may go insolvent this year.

That is NOT A RUMOR!

Well sure, it would be our tax money anyhow. But the point is that if it stands to benefit the little guy, screw 'em...

If it is AIG, on the other hand, well we have a problem.

It is just like that stimulus money I'm waiting on seeing. My bailout.
My 13 dollars per paycheck.

Maybe I'll use that to fund my childrens' college fund.
Actually, I'll be surprised if I even see THAT at this rate.

Excerpted lots of really good facts and information on this site:

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.

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 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.

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.

reply to post by Dbriefed


Glad to see someone has the lights turned on

Say buh bye to free checking, we've already said goodbye to decent interest on savings.

Fees upon fees upon fees.

Soon enough it will COST you money just to open an account

I have stopped ALL business with the banks.

Cash is king.

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!!!!

That is about the best description I've seen of the problem anywhere.

It is getting hard to separate the people who over borrowed and deserve what happened to them and the innocents who did nothing wrong.

I'm in a city that had good growth last year, solid property values, no bank failures, good prospects for the coming year, second best in the country in fact and my numbers are down 30% because businesses have stopped spending for no reason other than fear.

Obama's daily gloom and doom talk is not helping at all. Its got to stop. Why should the economy falter in areas untouched by the troubles. Its all fear based on what the knot heads are saying to keep everyone scared enough to vote for them and turn a blind eye to their flooding their friends pockets with our money.

Bush was bad. This is going to be ten times as bad. We jumped straight into the fire I'm afraid.

No FDIC? I'm going to slowly move everything to gold and maybe buy some bare lots. Even if their value goes down I won't loose nearly as much. Wells Fargo has been all over me to move my accounts to their bank all of the sudden. I've never had an account with them so it is weird to me. It's just driving me away. I wonder if Credit Unions would be smarter. Hmmmm, got to look into that.

reply to post by redhatty


I had actually stopped doing business with banks before this mess even started.

It was the simple fact that ALL of my money is accounted for before I get it.
Might as well cash my check and pay my bills.

So, as you said, cash is king.
I also turned down the opportunity to buy a home with money from trust. I just had a feeling on that one.
As it stands right now, I'm alright. No notes. No obligations. No credit cards. Two good vehicles and two jobs.

I'm still worried, though.

The economy has been in crappy condition for quite some time. I started feeling a definate squeeze years ago. Other people felt it too. But Bush kept telling us everything was fine. The smart ones didn't believe him. He's a politician afterall. By now it should be apparent to everyone that our Representatives despise us and are trying to bring us harm.


[edit on 4-3-2009 by Jay-in-AR]

I linked my thread
Never ending bailouts? Bernake wants another $750Billion for banks
www.abovetopsecret.com...
to this one.

The one statement caught my attention, and is directly related to this thread:

“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.”

Also this one which fortells our personal futures:

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.

Note their unemployment number metrics are optimistic as pointed out in other threads.

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.

Course they won't stop paying..

But remember people, these are not just big banks like JP Morgan, Citi, Wells Fargo..

It's mainly small credit unions, regional banks, local banks, etc..

And the FDIC will never fail.. it's a political gimmick.. make the banks foot the bill (partially) and the voters think they are being spared. In reality, the FEDS will uphold the FDIC from ever going insolvent. Unless the big O is looking for political suicide..