Most Banks Are Safe ... So Is the FDIC?

[FOTD]

On a related matter....

http://money.aol.com/news/articles/_a/bbdp/most-banks-are-safe--so-is-the-fdic/92586?icid=200100397x1205978673x1200296488

[cks511]

Mish's thoughts

http://globaleconomicanalysis.blogspot.com/2008/07/fdic-chairman-shelia-bair-is-out-of.html

[cannon_fodder]

http://www.ok.gov/osbi/Criminal_History/Frequently_Asked_Questions/index.html
http://tulsanow.org/forum/topic.asp?TOPIC_ID=10794

If we're in to posting random links with no commentary. Seriously, why not just host a blog with an RSS feed?  If anyone was interested in seeing what links you wanted them to see... they could check it out.

But on topic, the FDIC had about $28B in reserves during the S&L crisis and paid out $250Billion+.  Currently reserves are at $60 Billion and anticipated failures are at $28 Billion.  So even if failures exceed reserves, it will work itself out as it did a decade or so ago.

As for the government footing the bill, that's an entirely other matter...

(see what I did there, I put forth actual thought and analysis into the discussion)

[we vs us]

quote:Originally posted by cannon_fodder

http://www.ok.gov/osbi/Criminal_History/Frequently_Asked_Questions/index.html
http://tulsanow.org/forum/topic.asp?TOPIC_ID=10794

If we're in to posting random links with no commentary. Seriously, why not just host a blog with an RSS feed?  If anyone was interested in seeing what links you wanted them to see... they could check it out.

But on topic, the FDIC had about $28B in reserves during the S&L crisis and paid out $250Billion+.  Currently reserves are at $60 Billion and anticipated failures are at $28 Billion.  So even if failures exceed reserves, it will work itself out as it did a decade or so ago.

As for the government footing the bill, that's an entirely other matter...

(see what I did there, I put forth actual thought and analysis into the discussion)

So I'm curious.  Do you think the government should NOT insure individual accounts against bank collapse?  As I understand it, that's the bulk of what the FDIC does.

[YoungTulsan]

So if I decide to take my cash out of the bank to cover my own donkey, the government will step in to cover the difference because my bank wastefully built drivethru ATMs on every streetcorner in the US?  Or to cover the difference because they gave loans to people who had their proof of income written in crayon on a napkin?

As a taxpayer, if the government is bailing out the banks, aren't you essentially prevented from getting your money?  Anything you take out of a bank directly translates into the same amount in new government spending.

[cannon_fodder]

Wevus, I think insuring deposits is a good thing.  It raises confidence and that is the basis for any strong economy.  HOWEVER, they need to increase their rates on institutions to cover actual costs and/or assume some kind of priority in a collapse.

I'm happy to see the government provide security, but as YT points out - doing so to the bennefit of poor decisions is not a good long term plan.  Same goes for the mortgage situation.