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Hey Bagholders! Gimme Another Half a Trillion for Banks!

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March 06, 2009 – Comments (4)

Great summary at Calculated Risk.

WSJ story is here.

Here's the best part. The banks, which normally fund the FDIC, said they can't be bothered to pay higher fees to insure themselves against failures and runs on the bank.

Last week, the FDIC proposed raising fees on banks in order to build up its deposit insurance fund, which had just $19 billion at the end of 2008. That idea provoked protests from banks, which said such a burden would worsen their already shaken condition. The Dodd bill, if it becomes law, would represent an alternative source of funding.

So, gentle bagholder, you and I are potentially on the hook for another half a trillion. They took the risk. They carted money to their own bank accounts by the truckload. You and I get to cover their losses.

But don't be angry. It's for your own good. Oh, and don't start with that whole "punish the executives" thing. This is no time for your petty class warfare.

What do you call a busload of bank CEOs heading off a cliff?

Sj

4 Comments – Post Your Own

#1) On March 06, 2009 at 11:13 AM, usmilitiadude (31.85) wrote:

Blind leading blind. Hope and Change. Natural Selection. Justice.

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#2) On March 06, 2009 at 11:15 AM, imobillc (< 20) wrote:

Great article!

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#3) On March 06, 2009 at 12:26 PM, devoish (96.47) wrote:

link 

Last summer when FDIC coverage went from from $100k accounts up to $250k accounts the fee was raised to maintain FDIC funds at a mandated minimum of 1.15% of insured deposits. (I believe coverage was also extended to money market accounts?)

A few days ago the FDIC wanted to increase the fee to insure deposits by .002% of all insured deposits to raise $27 billion.

1000's of bank CEO's complained about the adverse affects to their earnings and balance sheets so then the FDIC requested increasing a lending vehicle that has never been used from $30bil to $100bill in order to increase the fee by only .001% instead.

That change was passed in the House.

Upon arrival at the Senate, we suddenly need to consider the same lending request but for an unknown amount somwhere in a range from $100bil to $500bil?

For who, Mr Stress Test?

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#4) On March 06, 2009 at 1:19 PM, MarketBottom (29.33) wrote:

Expect one or more large banks to be declared insolvent, soon. Maybe this weekend.

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