FDIC says: Prepare for the "eventuality of a large bank failure"

[FRED]

FDIC updates rules on big bank deposit coverage
Jun 17, 2008 (John Poirier - Thompson/Reuters)

WASHINGTON (Reuters) - The Federal Deposit Insurance Corp approved on Tuesday a proposal to help U.S. bank examiners better determine the amount of deposits at a large bank in the event of a failure.

FDIC Chairman Sheila Bair has repeatedly said the failure of a big U.S. bank is remote. But more financial institutions, trying to deal with big exposures to soured mortgage lending, are expected to become insolvent this year.

The new rules would require the largest banks to modify their deposit systems so the FDIC could quickly calculate how much it would need to pay out on deposits in insurance coverage if one failed. That would include requiring banks to determine the order of qualified depositors.

The rules would apply to banks with at least $2 billion in domestic deposits and either at least 250,000 deposit accounts or total assets of more than $20 billion. About 160 banks would be covered by the rules.

"That is really a critical authority that we need to deal with, with the eventuality of a large bank failure," FDIC Vice Chairman Martin Gruenberg said at an open meeting.

[Mega]

Re: FDIC says: Prepare for the "eventuality of a large bank failure"

Eric
Brown's number 2 DARING is giving a spech in the "City" tonight..............very much along the same lines!
Mike

[GRG55]

Re: FDIC says: Prepare for the "eventuality of a large bank failure"

FDIC updates rules on big bank deposit coverage
Jun 17, 2008 (John Poirier - Thompson/Reuters)

WASHINGTON (Reuters) - The Federal Deposit Insurance Corp approved on Tuesday a proposal to help U.S. bank examiners better determine the amount of deposits at a large bank in the event of a failure.

FDIC Chairman Sheila Bair has repeatedly said the failure of a big U.S. bank is remote. But more financial institutions, trying to deal with big exposures to soured mortgage lending, are expected to become insolvent this year.

The new rules would require the largest banks to modify their deposit systems so the FDIC could quickly calculate how much it would need to pay out on deposits in insurance coverage if one failed. That would include requiring banks to determine the order of qualified depositors.

The rules would apply to banks with at least $2 billion in domestic deposits and either at least 250,000 deposit accounts or total assets of more than $20 billion. About 160 banks would be covered by the rules.

"That is really a critical authority that we need to deal with, with the eventuality of a large bank failure," FDIC Vice Chairman Martin Gruenberg said at an open meeting.

Regulators Lay Plans for Investment Banks' Fed Access

By Craig Torres and Jesse Westbrook
June 19 (Bloomberg) -- U.S. regulators are planning how to let investment banks retain access to Federal Reserve loans if the central bank shuts an emergency program in September, two government officials said.

Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox and their staffs are in almost daily discussions about the future of the so-called Primary Dealer Credit Facility, said one of the officials on condition of anonymity.

The Treasury and SEC want the program, designed to be in place until at least September, to be temporary. The discussions with the Fed center in part on what precautions might need to be in place in case a large securities company with hundreds of trading counterparties faces failure, as was the case with Bear Stearns Cos.

At the same time, any new rules would need to deter firms from becoming too dependent on Fed loans, addressing concerns that such aid might lead to more reckless lending and future financial crises.

``The question is: What is the appropriate quid-pro-quo for allowing access'' to the Fed, said Robert Eisenbeis, former head of research at the Atlanta Fed and now chief monetary economist at Cumberland Advisors Inc., a Vineland, New Jersey, investment firm. ``If the Fed is on the hook, they should have the responsibility'' to dictate capital and leverage ratios, he said...

...``We should quickly consider how to most appropriately give the Fed the authority'' to get information needed from financial companies ``and the responsibility to intervene in order to protect the system,'' Paulson said in excerpts of today's remarks distributed by the Treasury. He also will urge ``clarifying procedures'' to close firms other than commercial banks...

...``Either they will have to close the access and lock the door and throw away the key, or they will have to change the structure'' of supervision, said Edwin Truman, a former Treasury assistant secretary who is now a senior fellow at the Peterson Institute for International Economics in Washington. ``There is room for many views.''

http://www.bloomberg.com/apps/news?p...9Qs&refer=home

[Slimprofits]

Re: FDIC says: Prepare for the "eventuality of a large bank failure"

Eric
Brown's number 2 DARING is giving a spech in the "City" tonight..............very much along the same lines!
Mike

So the British pols and Central Bankers are more honest with the real people than their American counterparts? We get no such straight talk, as you mentioned on the other thread about our next President, "1ST thing he needs to do is sit down with the American people and EXPLAIN just HOW BAD things are............and WHO caused them!"

I can easily imagine a scenario in which that speech is about to begin, until an "emergency" takes place, cutting off all television and radio feeds.

King Says BOE Won't Flinch as Inflation Erodes Living Standards

``It will not be an easy time, and I know that some families will find it particularly difficult,'' King said yesterday in London. ``These changes to our spending power and to the housing market are real shifts that, although not easy to accept, we cannot side-step.''

[..]

``The Monetary Policy Committee is prepared to take whatever action is needed to return inflation to the 2 percent target and to keep expectations of inflation in the medium term anchored to the target,'' King said. ``We believe that a slowdown in the economy is necessary to dampen price and wage pressures.''

[World Traveler]

Re: FDIC says: Prepare for the "eventuality of a large bank failure"

This is class warfare by another means.

To reduce inflation, they will clamp down on "wage pressures", it will be a situation that some (average or poor, i.e. non-rich) families "will find particularly difficult", for British bankers these are "shifts we cannot sidestep".

Where were these banking authorities for the last 5 years, while the banks and City of London firms and their employees were racking up record profits and bonuses. They endangered the financial system and now these rich and influential bankers get to keep their bonues, while the rest of England (the non-rich and non-connected) make painful adjustments.

I hope to live to see the day they and their U.S. counterparts get called on their hypocrisy. Unfortunately, the non-rich will have to suffer a lot more before we have a "sea change" and that happens.

[GRG55]

Re: FDIC says: Prepare for the "eventuality of a large bank failure"

So the British pols and Central Bankers are more honest with the real people than their American counterparts? We get no such straight talk, as you mentioned on the other thread about our next President, "1ST thing he needs to do is sit down with the American people and EXPLAIN just HOW BAD things are............and WHO caused them!"

I can easily imagine a scenario in which that speech is about to begin, until an "emergency" takes place, cutting off all television and radio feeds.

King Says BOE Won't Flinch as Inflation Erodes Living Standards

I'm not so sure it's really any better across the pond...:rolleyes:

On September 12, 2007 BoE Governor Mervyn King had this to say:

Bank won't bail out City