The FDIC is Broke

[e_goldstein]

http://www.chrismartenson.com/blog/f...now-what/25274
:eek:

[vinoveri]

Re: The FDIC is Broke

Er, perhaps the bigger issue is that the USA is broke.

[FRED]

Re: The FDIC is Broke

See FDIC R.I.P

[e_goldstein]

Re: The FDIC is Broke

Thank you, Fred.

[zoog]

Re: The FDIC is Broke

From WSJ:

WASHINGTON -- The government said the fund that protects consumer bank deposits has fallen into the red and will remain there into 2012, a pointed symbol of how the aftershocks of the financial crisis will reverberate for years as banks continue to fail at a high rate.

The negative balance is a headache for the Federal Deposit Insurance Corp., which runs the fund. On Tuesday, it proposed the unprecedented step of having the banking industry prepay $45 billion in fees by the end of the year to give the government more breathing room to handle future failures.

The only other time the fund fell into the red was in 1991, during the savings-and-loan crisis, and it shows how U.S. officials underestimated the impact of this crisis on the government's cash needs.

The FDIC can borrow $100 billion from the Treasury at any time, plus Congress approved up to $500 billion with the signoff of the Treasury secretary and the Federal Reserve.

However, there is this from Bloomberg:

Sept. 23 (Bloomberg) -- A legal limit on U.S. debt may put pressure on the Federal Deposit Insurance Corp. to replenish its coffers by assessing fees on banks rather than borrowing.
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Any new government borrowing brings the outstanding U.S. government debt closer to the $12.1 trillion limit. Tapping the FDIC’s line of credit or borrowing through the Federal Financing Bank or from private banks also would have implications for the debt limit, Treasury spokesman Andrew Williams said in an interview.

A couple charts I've been putting together:




The vertical spike was Washington Mutual. The third quarter FDIC CFO's report is not out yet, but I went ahead and put the DIF balance down as zero.