Stepping into the Twilight Zone: FDIC May Ask Banks for a Bailout

[LargoWinch]

So, let me get this; Ponzi scheme on steroids?

Runtime: 3min.

[D-Mack]

Re: Stepping into the Twilight Zone: FDIC May Ask Banks for a Bailout

U.S. Debt Limit May Hamper Any FDIC Request for Treasury Rescue
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By Rebecca Christie

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.

The FDIC board is set to meet next week to decide how to refill funds depleted by 94 bank failures this year. The options include new assessments on banks, tapping a $100 billion line of credit with the Treasury Department, or borrowing money from banks or debt markets.

One scenario the FDIC says it is considering would involve asking banks to pay future insurance fund assessments in advance. Banks could pay upcoming fees now, while they are holding cash anyway. Later on, banks would receive credit for fees already paid, which could free up more cash for lending in the future.

“Pre-paid assessments would allow the FDIC to replenish the Deposit Insurance Fund in a way that does not permanently damage banks’ financial viability,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York.

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.


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http://www.bloomberg.com/apps/news?p...d=aonZB7NPmp1A

[LargoWinch]

Re: Stepping into the Twilight Zone: FDIC May Ask Banks for a Bailout

I meant to also publish this along with the clip:

FDIC May Ask Banks for a Bailout

Published: Tuesday, 22 Sep 2009
By: Stephen Labaton
The New York Times

Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.

Continued here.

[Milton Kuo]

Re: Stepping into the Twilight Zone: FDIC May Ask Banks for a Bailout

U.S. Debt Limit May Hamper Any FDIC Request for Treasury Rescue
Share | Email | Print | A A A


By Rebecca Christie

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.

The FDIC board is set to meet next week to decide how to refill funds depleted by 94 bank failures this year. The options include new assessments on banks, tapping a $100 billion line of credit with the Treasury Department, or borrowing money from banks or debt markets.

One scenario the FDIC says it is considering would involve asking banks to pay future insurance fund assessments in advance. Banks could pay upcoming fees now, while they are holding cash anyway. Later on, banks would receive credit for fees already paid, which could free up more cash for lending in the future.

“Pre-paid assessments would allow the FDIC to replenish the Deposit Insurance Fund in a way that does not permanently damage banks’ financial viability,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York.

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.


...
http://www.bloomberg.com/apps/news?p...d=aonZB7NPmp1A

It seems to me that one way for all Americans to help the FDIC would be to take 100% of their savings out of their banks and put the money into their mattresses. If every American followed this course of action, the FDIC would not be burdened with having to make depositors whole when the banks go under.

[ThePythonicCow]

Re: Stepping into the Twilight Zone: FDIC May Ask Banks for a Bailout

It seems to me that one way for all Americans to help the FDIC would be to take 100% of their savings out of their banks and put the money into their mattresses. If every American followed this course of action, the FDIC would not be burdened with having to make depositors whole when the banks go under.

True. The banks would already have evaporated when we withdrew our money. No banks, no FDIC, no FDIC problem.