The FDIC Is in Trouble

[peaceandlove]

The FDIC Is in Trouble :mfr_omg: :naughty:

By Bud Conrad / Sep 09

As we all know, the Federal Deposit Insurance Corporation (FDIC) guarantees depositors that they’ll get their money back if a bank fails, at least up to a certain amount. To fund its operations, the FDIC collects small fees from the banks that are held in reserve for the purpose of taking over troubled banks and paying off depositors.

Since the Great Depression, a period marked by widespread runs on banks, the FDIC has done a good job of fulfilling its mandate. So how are they doing in this crisis?

In a nutshell, they are in trouble.

The FDIC insures 8,246 institutions, with $13.5 trillion in assets. Not all of them are going bankrupt, of course. Yet as of late July, a disturbing 64 banks had gone belly up this year – the most since 1992 – costing the FDIC $12.5 billion. At the end of Q1, the agency was already asking for emergency funding.

And worse, much worse, is likely yet to come...

Continues with Charts: http://www.escapefromamerica.com/2009/09/the-fdic-is-in-trouble/

ARTICLE SOURCE: http://st0ckman.blogspot.com/2009/09/fdic-is-in-trouble.html Also see current gold and silver prices daily on this blog.

[peaceandlove]

The FDIC Is Broke

Tuesday, November 24. 2009
Posted by Karl Denninger

Yes, really.

Off the wire this morning:
FDIC Deposit fund had negative $8.2B balance in Q3
That's broke. Bankrupt. Kaput. Gone. Poof. Dead. Rotting. A corpse.

Yes, yes, I know, Treasury has their back. But let's not forget - The FDIC does not have a legal "full faith and credit" guarantee from the US Federal Government and Treasury.

It has a "sense of Congress" resolution, but not a formal, legally-binding guarantee.

I am not, by the way, predicting an actual FDIC failure to pay. Should such an event happen it would be tantamount to a declaration of revolutionary war (by the government about to be deposed!) as if there is one thing that would cause Granny to reach for her shotgun, it would be getting screwed out of her life savings after Sheila Bair and everyone else in our government has trotted out how their money is "fully safe" and that "nobody has ever lost a penny of insured deposits and never will" for more than 20 years, including lots of pronouncements of exactly that mantra over the last year.

Nonetheless this outlines the underlying problem the FDIC has - it has willfully and intentionally ignored the fact that banks have mismarked their "assets" to overstate their values, it has refused to demand that accounting be done on a strict "mark to market" basis by bank examiners, and indeed, it has backed the "extend and pretend" commercial real estate "rollover" provisions of recent months, all of which is manifestly unsound, intentionally misleading, a consequence of willful refusal to enforce 12 USC Ch 16 Sec 1831o ("Prompt Corrective Action"), and has led to enormous losses being absorbed by the Deposit Insurance Fund that should have never happened.

The result?

THE FDIC IS BROKE.

Let's put this in common-man terms:
YOUR SO-CALLED "DEPOSIT INSURANCE" AND THE SEVERAL TRILLION IN CITIZEN BANK DEPOSITS ARE BACKED BY THE SAME AMOUNT OF CAPITAL THAT AIG HAD TO BACK THEIR CREDIT DEFAULT SWAPS: BUPKIS.
Congratulations Sheila - is that your resignation I see in your hand or is that your promotion from Obama - after all, we all know that in Government the more you screw up and screw the taxpayer, the better the job you're offered.

One final question: Is the only thing preventing panic and bank runs the sheer stupidity of The American People?

SOURCE: http://market-ticker.denninger.net/archives/1660-The-FDIC-Is-Broke.html


Perhaps the question Karl Denninger should ask is: Is the only thing preventing panic and bank runs due to the 'brainwashing' of The American People?

[Night Light]

The NY times put this article out on the same date as the one above.

As Bank Failures Rise, F.D.I.C. Fund Falls Into Red
(http://www.nytimes.com/2009/11/25/business/economy/25fdic.html?_r=1&partner=rssnyt&emc=rss)

I checked the fdic site for recent press releases and found this release, dated 11/17/09, only a week prior to these articles, stating:

No Safer Place for Your Money: Why the FDIC's Resources are Strong and Insured Deposits are "Absolutely Safe"
(http://www.fdic.gov/news/news/press/2009/pr09210.html)

I am tired of being lied to. Read both of these articles and you can see right through the b.s.
According to Chairman Bair, the bottom line for consumers is this: "No insured depositor has ever lost a penny of insured deposits -- and none ever will. The FDIC was created specifically for times like these. Our resources are strong. Your insured deposits are absolutely safe."

Benjamin Fulford told us in september that the FDIC is bankrupt. Can we now say this is accurate?

They say that they "can quickly borrow money from the U.S. Treasury. However, Chairman Bair has stressed that the FDIC expects to continue to collect premiums from the banking industry to pay for banking industry problems -- without borrowing from U.S. taxpayers."

If only the taxpayers new that its all a scam to separate them from their wealth and personal power. How can it be that if FDIC fails, and if most of the banks fail, the financial fallout be put on the shoulders of the US taxpayer? What ever happened to the age old saying "you reap what you sow"? The US taxpayer has been scammed plenty, and sure they are often guilty of ignorant bliss, but how can responsibility for the crooked few fall on the backs of the common taxpayer?

I have a billion opinions regarding all of this, and rather go into a tirade about monetary society and economic slavery, I will hold my tongue. In avalon, I'd be preaching to the choir. In all honesty, I welcome collapse, for in order for the masses to realize the necessity for change, the current construct's obsoleteness must become fully apparent.

It will be an interesting winter.

[PilotSimone]

I welcome collapse, for in order for the masses to realize the necessity for change, the current construct's obsoleteness must become fully apparent.

It will be an interesting winter.

I have always assumed a collapse. I see no other way forward to real freedom.

Americans will have to collectively stop. There won't be time for bickering and egos. We will pull together and create a society that honors everyone. Where everyone's physical and emotional needs are met. A wisdom-based economy rather than a monetary one...

That's the way my dream goes anyway. :original:

[Night Light]

I have always assumed a collapse. I see no other way forward to real freedom.

Americans will have to collectively stop. There won't be time for bickering and egos. We will pull together and create a society that honors everyone. Where everyone's physical and emotional needs are met. A wisdom-based economy rather than a monetary one...

That's the way my dream goes anyway. :original:

I appreciate your optimism.(Collapse leading to real freedom is a slippery slope. Not that I disagree though)

Perhaps you would care to elaborate on this "wisdom-based economy". I myself support a Venus Project style "rescource based economy" though I do not support every aspect of it.

Please see my post here for further perspective.http://www.projectavalon.net/forum/showthread.php?t=4658&page=5