Five more banks failed today. That ain't good.

Madeline

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A banker friend of mine told me the FDIC is nearly broke. The center, it seems, will not hold.

Time to stock up on canned goods yet, I wonder?


 
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Neubarth

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A banker friend of mine told me the FDIC is nearly broke. The center, it seems, will not hold.

Time to stock up on canned goods yet, I wonder?


The FDIC is funded from the Banks it serves. The money that they have collected in the past has served them well, but we are in a new situation where we have a Depression far greater than the previous one of the 1930's. If there are any more levies piled upon the banks, more banks will fail and that will deplete FDIC funds further. The FDIC will have to go to the Government and ask for some new start up cash to carry them further. The smaller banks can not afford their FDIC "Dues" any longer. As of late, the FDIC has been responsible for numerous bank failures.
 

Madeline

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I didn't realize the FDIC was getting its funding from banks. Small banks cannot afford their "dues"? WTF? It isn't as if it's some sort of surprise to them -- or are they getting hit with assessments for banks that failed already?
 
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Neubarth

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i didn't realize the fdic was getting its funding from banks. Small banks cannot afford their "dues"? Wtf? It isn't as if it's some sort of surprise to them -- or are they getting hit with assessments for banks that failed already?
BIG TIMEeeeeee!
 
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As the assets they were holding (bonds based on mortgage debt) gets rated lower, their ratios of holding to debt declines until they are no longer viable banks.

This is why the system we allowed to develop (read deregulation of what banks can invest in) was a mistake.
 

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My banker friend says there were many, many new bank laws in the health care bill and they some of them go into effect June 1st -- and bank failure rates are about to climb through the roof. I wish to God Congress would pause and reflect. Our banking system could not be more central to our economy; why tinker with it behind closed doors and bury the passages inside a 2,500 page bill on health care?
 
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Neubarth

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Did you know that Bank of America, J.P. Morgan Chase, and Wells Fargo are currently in violation of federal banking law, but the government won't enforce that law?
The law in question is the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994, passed by a Democratic Congress and signed by a Democratic President.

Prior to passage of this act, banks were restricted from operating widespread, multi-state branching networks. Plus, many states had their own restrictions on banks. These restrictions dated all the way back to the National Bank Act of 1864. The result was a nation full of relatively small banks. The idea was that competitive equality was good for the industry. Local banks invested their money locally, while large banks drained funds from rural areas and directed them to large cities.
(more)
One of the primary means for Wall Street banks to bring in revenue these days is charging fees for pretty much everything. They will haul in 38 Billion dollars on overdraft fees this year, with a median APR of 4,547%. That's enough to make a loan shark blush. They will rake in another $48 Billion from credit card swipe fees.
The best example of predation by the banks is in the form of payday loans. The major banks have always been silent owners behind this loan shark filth that suck the life blood out of the poorest, but lately they have come out into the open.

A few of the nation's largest banks -- including Minneapolis-based U.S. Bancorp, Wells Fargo & Co. of San Francisco, and Fifth Third Bancorp of Cincinnati -- are now marketing payday loan-type products, with triple-digit interest rates, to their checking account customers.

Bits of News - Deregulation and the Triumph of Wall Street
 

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