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| Bair Says Insurance Fund Could Be Insolvent This Year |
| 2009-03-06 |
| In other words, if your bank fails and the fund is broke, you loose all the money you have in your bank account... But that will NEVER be the Democrats that now control everything's fault. Now THAT is what you call CHANGE! 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." The FDIC last week approved a one-time "emergency" fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said. The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund. Smaller banks are outraged over the one-time fee, which could wipe out 50 percent to 100 percent of a bank's 2009 earnings, Camden Fine, president of the Independent Community Bankers of America, said yesterday in a telephone interview. |
| Posted by:Snaimp Theter6309 |
| #6 If you think the crisis is bad now, just imagine the FDIC reneging on its pledge, even to small-potatoes savers like me. It would be March 1933 all over again, as depositors scrambled to convert their account balances into currency. That can't be done in a short period of time. It seems inevitable that there will be a surge of bank failures, as the awareness of the true scope of bank insolvency spreads. Yup, it is truly time to institute National Health Insurance. |
| Posted by: Anguper Hupomosing9418 2009-03-06 16:38 |
| #5 There are plenty of Americans with incomes well below the $250,000 annual income level who have been exceedingly frugal. My darling in-laws, for instance, always set aside 25% of my father's salary as a steel worker, using it to buy a little house, put two children through college at nearby state schools, and set aside substantial funds for their old age. This, despite the steel plant closing before my father-in-law hit the half century mark, throwing him into unplanned very early retirement; they have continued to set aside a portion of his pension payments toward their very old age, putting a substantial portion of their savings into CDs. I can easily imagine they had funds above the cut-off. |
| Posted by: trailing wife 2009-03-06 11:10 |
| #4 The 2 to 3% limit doesn't apply here. We have a very, very large amount of foreign deposits by folks from other countries that trust American banks more than there own. FDIC being one reason. |
| Posted by: Jack is Back! 2009-03-06 09:40 |
| #3 I'm awaiting a cost sharing 'customer funded FDIC scheme' where one is |
| Posted by: Besoeker 2009-03-06 08:16 |
| #2 to rebuild a fund to repay customers for deposits of as much as $250,000 Anyone have a reference on a site with the distribution of how much we really do have in our accounts? Given that 250K just in annual salary would put you into the 2 or 3 percent mark, I would doubt many Americans, outside the usual suspects of those with 'special' connections [who got the coverage amount raised from 100K not too long ago], have that much. Stupid to have raised it in the first place and thus creating the situation we have now. Smaller banks are outraged over the one-time fee, which could wipe out 50 percent to 100 percent of a bank's 2009 earnings, That appears to be the real damage. The experts and those in charge who brought us to this point are now compounding the problem. |
| Posted by: Procopius2k 2009-03-06 08:10 |
| #1 No worry. The One loves you---his administration is already busy preparing for food rationing. |
| Posted by: g(r)omgoru 2009-03-06 04:45 |