On Friday February 27th, the FDIC announced the immediate implementation of an emergency fee of 20 cents per $100 of insured deposits. They may be approaching panic mode. by Chuck Angier
(libertarian)
Monday, March 2, 2009
Last September, I wrote about the questionable status of the Federal Deposit Insurance Corporation (Don't Count On the FDIC). Well, on Friday, February 27, the FDIC announced that it would charge banks an emergency fee of 20 cents per $100 of deposits, hoping to generate $27 billion in premiums for 2009, a long shot considering they only collected $3 billion in premiums for 2008. The FDIC estimates that bank failures could cost the fund $65 billion by 2013.[1]
According to the FDIC, 16 banks have failed in the first 2 months of 2009, compared to 25 in ALL of 2008, just 3 in 2007 and none in 2006 and 2005.[2]
The most recent (3rd quarter, 2008) report from the Chief Financial Officer, showed the fund balance at $34.59 billion, including $32.56 billion in "US Treasury Obligations" and only $854 MILLION (less than 2 1/2%) in cash a decline of over 90% in just 3 months![3]
As of December 31st 2008, the Deposit Insurance Fund (DIF) Ratio declined to a dangerous 0.40%! In other words, the FDIC had a fund balance of about $19 billion insuring $4.76 TRILLION in deposits.[4] The FDIC is required to maintain the DIF ratio at or above 1.15%.[5] The DIF broached the minimum sometime between March and June of 2008.
To make matters worse, the Emergency Economic Stabilization Act of 2008 directs the FDIC not to consider the temporary coverage increase to $250,000 in setting assessments[6], thus presenting a more favorable position than the facts would suggest. Wouldn't the rest of us be in jail if we tried something like this?
I get the impression that the FDIC is in panic mode as one sizable failure could wipe out their cash, but then, they are backed by the "good faith and credit of the US Treasury", which is..duh..empty!
Angier is self-employed in agri-business and can be reached at chuckangier@gmail.com.
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 Now admittedly the US government is flat broke with a current debt of $11 trillion and unfunded future liabilities of $40 trillion, so they don't actually have any money. But they do have the printing presses. My guess is that they will just print the money or create it electronically. Of course that's likely to cause inflation which means you will get your money but it won't buy much.
They will print any money they need as they go. The purpose of the FDIC is to get us to put our money in banks, thinking it is safe, and then the banks can make money off our money in risky investments. In a sense, they are creating two dollars for every dollar.
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