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FDIC Angling for a Taxpayer Bailout Now Too



August 27, 2008 – Comments (1)

Wow, leverage is awesome! The lifeblood of modern economies! All hail the financial geniuses who can borrow and estimate their way to massive profits, despite the fact that they need the crutch of taxpayer leeching on the way back down. Think the self-insured banks can weather the storm without shafting savers or taxpayers? Think again.

Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures.

Ms. Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold.

Sure it would. And those assets are guaranteed to be teh awesome once Bair has her agents stop foreclosures and modify the loans back to terms that make them worth less -- if not worthless?

When will the simians running these agencies learn that they need to deflate the bubbles on the way up? It's simply not possible for them to be smart enough or solvent enough to fix problems on the way back.

1 Comments – Post Your Own

#1) On August 27, 2008 at 10:15 AM, anchak (99.90) wrote:

And the dollar is strengthening amidst all this....actually if it continues this path - its horrendous - because when the market will be flooded with (if its not already) greenbacks held overseas ..... what will happen!


Also SB - its her hour in the sun ......and she's trying to do bridge financing - Yoohooo! Typically in a sane environment - one would do a careful scrutiny on the underlying pledged collateral - read assets of worthless failed banks - and then try to delever the transaction as much by controlling the lending amount to a minimum ( Loan To Value ratio) . Wonderful, Oh my Savior cometh ! But oh my god! They do the same things as these lemmings who created this mess in the first place.

Also where the is market that will be willing to pay the value FDIC hopes for - the vultures out there will pay nothing.

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