Topic: The Banksters
Bank United Collapses - FDIC "Insurance" Getting Wiped Out Last month I described the collapse of the American banking system as "Off a Cliff with No Airbags." Are we already in mid-air?by Jake Towne, the Champion of the Constitution
(libertarian)
Thursday, May 21, 2009
Today BankUnited FSB became the nation's 34th bank to fail this year. Bank failures are nothing new, but this one will cost the FDIC $4.9 Billion per the FDIC press release issued Thursday, May 21. BankUnited had assets of $12.8 Billion and deposits of $8.6 Billion.
The takeover group is led by the infamous Carlyle and Blackstone investment groups. The take-away for the average Joe Public - is this:
The FDIC started 2008 with $53 Billion in its insurance fund, and this number is now less than $11 Billion. This translates to mean that less than a quarter of every $100 you have in a bank account is now FDIC "insured."
It does not take a genius to predict that the FDIC insurance fund will be depleted this year, and a public bank closing (or "bank holiday" - as if it were some sort of twisted vacation) is likely this year. (Photo courtesy Luc Viator)
As a reminder, the press often compares the Obama administration to FDR. FDR closed the nation's banks in 1933 when he also outlawed gold. Immediately afterwards, the dollar was devalued by 67%.
Speaking of gold, the gold price shot up to $950/oz after reaching a minimum of $865/oz in mid-April. Holders of gold will win the Gold War that is currently playing out in the world's smallest major market of roughly $25 Trillion in 2008. Please try these recent articles I wrote:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.
Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.
Tu ne cede malis sed contra audentior ito. Do not give in to evil but proceed ever more boldly against it.
"Intelligence is quickness in seeing things as they are." - George Santayana
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Jake I share your concern about the situation but I think it will play out like this: At some point FDIC will have insufficient funds to cover bank losses, but FDIC is backed by the full faith and credit of the US government. So the government will either borrow or print the money to make good on the losses. Borrowing the money will leave the taxpayers stuck for the loss. Printing the money will eventually result in price inflation... lots of it. Neither of those is good but at least the depositors will not lose their savings in the banks.
If the FDIC should happen to default on their deposit insurance then I think you would see a mass exodus from bank accounts and into gold, stocks, property or anything else that might hold its value.
Posted By: Jake, the Champion of the Constitution
Date: 2009-05-22 03:27:20
Dear David S -
Yes, the question is the details. Will the banks close while the FDIC obtains the funds from Congress? How long will this take? Days? A month? Remember, we are talking about a government here :)
Is there enough physical paper cash to cover a mass exodus?
At any rate, I am sure Chairwoman Sheila Bair is having a few restless nights.
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The FDIC started 2008 with $53 Billion in its insurance fund, and this number is now less than $11 Billion. This translates to mean that less than a quarter of every $100 you have in a bank account is now FDIC "insured."