You won't believe this! (Alas, yes you will)

[AlbertCat]

As seen on Tom Tomorrow's blog....


I'm just gonna copy and paste here:


Tom Tomorrow:
WTF?
Really?

Really?

WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.

Now with 25 banks having failed last year, 17 so far this year, and many more expected in the coming months, the FDIC has proposed large new premiums for banks at the very time when many can least afford to pay. The agency collected $3 billion in the fees last year and has proposed collecting up to $27 billion this year, prompting an outcry from some banks that say it will force them to raise consumer fees and curtail lending.

To possibly reduce the fee increase, the FDIC has asked Congress for the temporary authority to borrow as much as $500 billion from the US Treasury - up from the current $30 billion limit - in case the number of bank failures increases even more dramatically. If Congress approves the measure, to borrow more than $100 billion, the FDIC would still need permission from the Federal Reserve, the Treasury Department, and the White House.

Are we at “perfect storm” levels yet, or do we need one more colossal instance of incompetence and/or corruption to push us over the edge?


posted by Tom Tomorrow at 4:52 PM | link

[Rabrrrrrr]

1. Fucking hell. If true, that's damn scary.

[originalpckelly]

5. THEY CAN ONLY BORROW $30 BILLION RIGHT NOW!

That's what's fucking me up, they have liabilities of FOUR FUCKING TRILLION DOLLARS!

[DevonRex]

9. This could be bad. Really bad. How's that for understatement?

[Greyhound]

Yes, I believe!

And no, the perfect storm is still forming.
:kick:

[DevonRex]

2. I need links. Thank you.

[Junkdrawer]

12. Here

http://thismodernworld.com/4717

[DevonRex]

13. Thank you very much. So it's from Boston.com.

I emailed the link to my son to see what he thinks.

[nichomachus]

14. You want a link? Here's a link

Just stumbled across this one from November 1995 . . . .

http://query.nytimes.com/gst/fullpage.html?res=9F04E6D71539F936A25752C1A963958260

The Federal Deposit Insurance Corporation decided today to virtually eliminate deposit insurance premiums for most commercial banks after concluding that its insurance fund had enough money to cover bank failures in the coming months.

Bankers welcomed the unanimous decision by the agency's board, which will take effect on Jan. 1 and save them $946 million a year in premiums. Industry lobbyists waged a vigorous campaign to eliminate the premiums, arguing that they were unnecessary after the Bank Insurance Fund late last spring reached its Congressionally mandated target of $1.25 in reserves for every $100 of insured deposits.

Ricki Helfer, the chairman of the F.D.I.C., said premiums needed to be reduced because of the banking industry's current health, the economy's strength and the expectation of F.D.I.C. examiners that few banks would fail soon. Premiums will still be collected for some banks with risky business practices and less solid finances. Still, the income from premiums as a share of insured deposits will fall to the lowest level in the 62 years of Federal deposit insurance.

Consumer activists and even some of the board's members criticized the decision. "Under a better system, we would be allowed to build up a surplus in better times that we would run off in bad times," said Jonathan L. Fiechter, the acting director of the Office of Thrift Supervision and one of the four sitting members of the F.D.I.C.'s board.

Ralph Nader, the consumer activist, contended that the $25.08 billion now in the Bank Insurance Fund could be exhausted easily by the collapse of one or two of the giant banks now forming from the industry's many mergers, leaving taxpayers with the burden of paying for any further failures. Today's decision "is a prescription for another round of corporate bank welfare," he said.

[DevonRex]

15. Wow. That's an excellent link. This OP is one of the most important

and most frightening stories in a long, long time. And your link that provides real-time historical information is vital.

[nichomachus]

17. Yes, too bad there wasn't someone there to warn us

that the taxpayers would be stuck footing the bill for another round of bank welfare . . . . Oh, wait a minute . . . ,.

[DevonRex]

19. Yeah. Oops.

Why weren't congressional dems warning us, too? Or the guy who was in charge before 2001?

[originalpckelly]

3. WTF? They can only borrow $30 billion, then how is that the full faith and credit of the US Gov?

$30 billion is a minor percentage of what the FDIC is liable for, which is $4 odd trillion!

OMG! I just cannot believe this shit.

And even if the taxpayers bailout the FDIC, it's just another example of the rich privatizing profits and socializing.

[KansDem]

4. Let's see...which political party controlled Congress from 1996-2006?

...facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.

Oh, yeah...that one :eyes:

Maybe if Congress had addressed matters like this one rather than spending so much time and money on impeachment, this wouldn't have happened!

Ya'think?

[Wednesdays]

20. And IIRC, according to the Constitution it's Congress that holds the purse strings

Section I, Article 8 of the U.S. Constitution:

Section 8 - Powers of Congress

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures...

[Tuesday Afternoon]

6. Razor's Edge.

walking it.

[redqueen]

7. Can we start taking anyone's assets yet?

I'm sick of fatcat @(%$*&$%&^%@s getting away with this crap.

[CanonRay]

8. FDIC hasn't been collecting premiums from banks for about 10 years

[omega minimo]

10. K/R/WTF

[ebay_bizzare]

11. Cool

Cool

[DevonRex]

16. K&R and...

:scared:

[Mnemosyne]

18. Yet their minion was on WJ this a.m. stating everything hunky dory. Lying

sack of shit.

[GeorgeGist]

21. american capitalism strikes another blow ...

for it's own destruction.

Help