The FDIC is broke

[FluffyMcDeath]

Here's the report:

Sept29no1.pdf

staff estimates that both the Fund balance and the reserve ratio as of September 30, 2009, will be negative. This reflects, in part, an increase in provisioning for anticipated failures.

Well, maybe not completely broke...

In contrast, cash and marketable securities available to resolve failed institutions remain positive.

but don't panic and run off to the bank to take out all your money -

Insofar as insured deposits are fully backed by the full faith and credit of the United States government and no insured depositor has ever or will ever take a loss,

 

[redrumloa]

See fluffy, I told you the f***ing banks should have been allowed to fail. How many trillions of dollars went into the shredder now and counting? The market is broken because there is no true capitalism at play here.

 

[FluffyMcDeath]

See fluffy, I told you the f***ing banks should have been allowed to fail. How many trillions of dollars went into the shredder now and counting? The market is broken because there is no true capitalism at play here.

Banks failing is what makes the FDIC broke. About 93 banks have failed this year. A couple of those failed banks were pretty big. Unfortunately the banks that remain just get bigger.

Those big banks need to be broken up into failable sized pieces - before we let them fail. The "too big to fail" is partly true. They CAN fail, of course, but can't be allowed to because the entire system would choke on the corpse. Letting the big banks fail would ultimately fix the problem but a well executed plan to dismantle the banks would be better.

A demolition that brings a building down into it's own footprint to spare surrounding structures and on a specific timetable is much preferable to having the building fall haphazardly at random due to structural problems.

 

[cecilia]

big business and monopolies are bad


and unamerican

but mostly, just not a good idea

excellent analogy, Fluffy

 

[FluffyMcDeath]

This fellow's blog mentions a lot of smart people who think the too big to fail banks need to be broken up. It's a good little read. Talks about the existing authority under which it could be done and talks a little about why it probably won't be.

 

[cecilia]

thanks, impressive article