INSANITY has no limits in 9.09
The Federal Deposit Insurance Corp may ask healthy U.S. banks to lend billions of dollars to restore the health of the depleted fund that safeguards bank deposits, the New York Times reported, citing senior regulators.
The paper said the initiative, which has gathered strong support across the board, is seen as a more attractive alternative to tapping the $500 billion line of credit with the U.S. Treasury, or yet another emergency assessment.
According to the paper, the FDIC was reluctant to approach the Treasury department for additional funds, since any new borrowing could be seen as a bailout, and have a strong political reaction.
LET'S THINK ABOUT THIS FOR A SECOND......
We are going to borrow from the insured to insure the insured's accounts????
That would be like borrowing from the homeowner to insure his house.
Not only that, the FDIC borrowing from banks that are borrowing from the taxpayer for practically free and the banks are loaning back to the FDIC at a much higher rate. This is absolutely insane...why wouldn't the FDIC borrow at the same rate as the banks and save the taxpayers the spread?????
Furthermore, we are not even sure that the banks are solvent because they are not marking their assets to market as we all know that the market value of the collarteral for their loans are crashing.
Bascially, we are now effectively paying certain taxpayer bailed out banks to insure deposits that they should be rightfully paying to insure. Could you imagine if you got paid to insure your own house??? The insurance industry would be out of business tomorrow.
In any other environment, this would be legal fraud and nothing more than a Ponzi scheme....we normally prosecute citizens for this type of financial charade. Insureds can't be paid to insure themselves.....there is no consideration for the transaction.
Denninger is the only one so far that has picked up on this....let's see if more catch on....