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Can the FDIC Weather the Financial Storm?
The federal bailout of American Insurance Group (AIG) is like putting a finger in the dike. Next to potentially require government intervention is Washington Mutual, the nation's sixth largest bank with some $143 billion in deposits, which hangs by a thread. When—not if—it goes, the government is committed to protecting its depositors through the Federal Deposit Insurance Corporation. According to one estimate in The New York Timeson Wednesday morning, paying off Washington Mutual depositors could eat up half the FDIC's reserves, which currently stand at $45.2 billion. In August, the FDIC identified 117 banks and thrifts that could be in trouble. "A few more IndyMacs or 20 or 30 smaller collapses will wipe out [FDICs] reserves," predicts Dean Baker of the Center for Economic and Policy Research. That means the FDIC could bottom out, unless Congress steps in.
Commercial banks, already straining from the crisis, are now being encouraged by Treasury Secretary Henry Paulson, to take on crumbling Wall Street investment companies. That was the message in the Bank of America's recent takeover of Merrill Lynch. One of Washington Mutual's oft-mentioned suitors is Chase. That means that bank portfolios could become swollen with the junk bonds, lousy mortgages, and other speculative investments held by the unregulated collapsing investment banks on Wall Street. The already weakened commercial banks will find it difficult to survive with this additional load. If they fail, the FDIC's reserves are not big enough to cover the deposits of their customers.
With an election approaching, politicians in Congress can't possibly allow widespread banking failures. The crisis right now may seem abstract to many, but when Americans finally get the picture that their checking and money market accounts could be in jeopardy, then candidates for the presidency and other offices will have to come up with something beyond the empty rhetoric that passes for proposed policy to date. (Obama has promised leadership; McCain has promised a commission.)
Congress isn't likely to let the FDIC go down the drain. But how to save the day?
Inevitably, there will be a deal, which is likely to mirror some version the savings and loan bailout of the 1980s and 1990s, with the creation of an institution like the Resolution Trust Corporation into which the banks can dump subprime mortgages, junk bonds, and other speculative holdings. The RTC seized the assets of more than 700 S&Ls, worth some $400 billion, then sold them off to private investors. Far from a perfect solution, it was plagued by charges of contract corruption and mismanagement. On Tuesday, Rep. Barney Frank (D-Mass.), who heads the House Financial Services Committee, raised the possibility of a creating an RTC-like entity to handle the current crisis. In an interview with the New York Times, Frank said such an agency would need "tough new regulations" to prevent risky investments, but he did not delve into specifics.
Meanwhile, the AIG takeover opens another can of worms for unprepared federal regulators. The insurance industry has long fought successfully to avoid federal regulation. Currently, the industry is nominally regulated by weak state commissions, which can easily be bullied into submission by the big insurance firms. For years the insurance industry's point man on the Hill was Senator Thomas Dodd. Now, his son, Connecticut Senator Chris Dodd, who's also viewed as an ally to the insurance business, is the chairman of the Senate's banking committee.
REQUIRED READING: Biography of Mayer Amschel Rothschild, who made the comment; "Permit me to issue and control the money of a nation, and I care not who makes its laws."
I'm sure the Rothschild and other long-established world banking families, who have the most to lose by a now connected international money crises, are telling the fed exactly what they can do, with not our money, but their money.
I don't remember giving the fed $888 billion for a reserve... did you? You and I will still be paying off debts for just domestic disasters and DHS mismanagement for the rest of our working lives.
Anyway, the point is those same families get a huge horse-laugh when they read the ridiculous claims that political candidates make, when they are fully aware who it is that pulls the world's puppet strings. And I'm sure that they consider the notion that voters think they can change the course of history? very quaint indeed?
REQUIRED READING: Biography of Mayer Amschel Rothschild, who made the comment; "Permit me to issue and control the money of a nation, and I care not who makes its laws."
I'm sure the Rothschild and other long-established world banking families, who have the most to lose by a now connected international money crises, are telling the fed exactly what they can do, with not our money, but their money.
I don't remember giving the fed $888 billion for a reserve... did you? You and I will still be paying off debts for just domestic disasters and DHS mismanagement for the rest of our working lives.
Anyway, the point is those same families get a huge horse-laugh when they read the ridiculous claims that political candidates make, when they are fully aware who it is that pulls the world's puppet strings. And I'm sure that they consider the notion that voters think they can change the course of history? very quaint indeed?
There's a limit to everything. The financial crisis we're experiencing now is proof of that. The pigs that were gorging at the financial trough as of late are so heavy now, the gov't can't lift them or their liabilities. You might as well put that lipstick on the dollar.
The pigs have been allowed to gorge, vomit and gorge again, over and over again by CONSERVATIVE RIGHT WING REPUBLICANS and CONSERVATIVE RIGHT WING REPUBLICAN Lite DLC Democrats who have controlled and still control Congress for the purpose of breaking the left's infrastructure and safety nets, which is what we see happening. It is and has been a long-term plan of CONSERVATIVE RIGHT WING REPUBLICANS with the help of their REPUBLICAN LITE DEMOCRAT counterpart COOPERATORS.
Now their plan is to use up all the government's money protecting the Elite Capitalists from their egregiously outrageous loan investments, so that there can not possibly be any money left over to fund Social Security, Medicare, Health Care, Unemployment, etc. that are social nets for the Common Population.
Counterparts DLC Republican Lite Nancy Pelosi and DLC Republican Lite Harry Reid have been great cooperators with the CONSERVATIVE RIGHT WING REPUBLICANS; therefore, I am of the opinion that it would be advantageous to the unified left for both of them to be retired this November. I'm in favor of Cindy Sheehan taking over Pelosi's job and Harry Reid should at least be put back in the Senate where he can do the least amount of damage to the unified left.
Obama is unifying the Left and must be voted in for President by the unified Left.
Billions and billions and billions overseas for years and years and years...what DOES the future hold for the United States? Back to being a british colony? Way to go, international real estate speculators! Woohoo! All hail the Donald! All hail the Donald! All hail the somethingsomethingsomething...
Buddy, can you spare 85 billion? Soup is good food...
Ridgeway doesn't mention that there are, according to the Financial Times, $2.5 trillion in investments in U.S. banks that are not covered by FDIC - 36% - because they have more than $100,000 in CDs, etc. What happens when those people start 're-allocating' their cash out of the WaMus, etc.? $164Bn is what is uninsuread at WaMu, again according to the Financial Times. They might deposit it in another bank, or they might ... not. At any rate, outside the capitalization of the FDIC, it could create a dangerous situation for banks like WaMu, BofA, etc.
Martha Sez: Obama is unifying the Left and must be voted in for President by the unified Left.
Given that, according to the New York Times, only 20% of Americans describe themselves as LIBERALS, as opposed to the 32% who describe themselves as conservatives, how is a unified LEFT supposed to do that?
REQUIRED READING: Biography of Mayer Amschel Rothschild, who made the comment; "Permit me to issue and control the money of a nation, and I care not who makes its laws."
I'm sure the Rothschild and other long-established world banking families, who have the most to lose by a now connected international money crises, are telling the fed exactly what they can do, with not our money, but their money.
I don't remember giving the fed $888 billion for a reserve... did you? You and I will still be paying off debts for just domestic disasters and DHS mismanagement for the rest of our working lives.
Anyway, the point is those same families get a huge horse-laugh when they read the ridiculous claims that political candidates make, when they are fully aware who it is that pulls the world's puppet strings. And I'm sure that they consider the notion that voters think they can change the course of history very quaint indeed
As a United States Federal FDIC Whistleblower Against fraud, our United States Congress, Senate; and the House of Representatives should not bailout Wall Street. Wall Street must be investigated. FDIC and other corrupt regulators must be investigated. American Citizens are disgusted with the United States Congress' inability to enforce oversight, accountability, investigate and prosecute Wall Street and FDIC wrongdoers; and demand mandatory restitution. FDIC Financial Regulators compromised and breached their Fiduciary responsibilities in exchange for money and greed.
I personally exposed unaccounted fraud at the Federal Deposit Insurance Corporation (FDIC) year(s) 2002 through 2008. Former Congressman Albert W. Wynn also wrote a letter on my behalf directly to Congressman Barney Frank year 2008, regarding Financial Fraud reported at the FDIC; ignored by Congress. FDIC engaged into blatant Whistleblower retaliation. I was involuntarily removed from the FDIC year 2005 and 2006 because I had the courage to report FDIC CEO Financial fraud run amuck at the FDIC; ignored by FDIC Chairman Sheila C. Bair's willful breach of the American Public's Trust. Thus, there should not be a bailout of Wall street; absent an immediate investigation and accountability of the Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision, Office of the Comptrollers, FDIC CEO bonus packages; the Office of Special Counsel (OSC); and Wall Street corruption.
FDIC reported documented fraud is located at www.lulu.com incorporated into a 539 page disclosure report entitled: "Caught In A Web of Bureaucracy" The report was provided to select members of the United States Congress, Senate; Office of Special Counsel (OSC) written by Yolanda C. Gibson-Michaels; and now available to the American Public. Regulation of the Regulators is the only solution not a 700 Billion dollar blank check!!
Written by: Yolanda C. Gibson-Michaels (FDIC Whistleblower)
ygnmichaels@yahoo.com