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post #1 of 10 (permalink) Old 09-01-2009, 12:57 PM Thread Starter
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The pending FDIC bailout

Here's an article I outlined this morning that I thought was pretty interesting, and one about divergence of opinion within the FOMC:

The pending FDIC bailout
I. American citizens soon to learn the FDIC deposit insurance isn't free
A. FDIC deposit insurance funds are shrinking at alarming rate
1. FDIC insures $4.5 trillion in deposits
2. its insurance fund currently has a balance of $10.4 billion
a. balance was $40.2 billion a year ago
B. Recently had to add $15.6 billion by increasing fees charged to
banks to pay for the insurance
1. drained capital from banks at the time they need it most
2. widely believed to be considering charging banks another special fee
3. Congress requested an additional $500 billion in Treasury loans to fund
the FDIC
a. requested at the height of outrage over bailouts and bonus pay
1. never received media coverage
4. FDIC recently drew down its $25 billion line of credit from the treasury
a. to avoid draining more capital from member banks
C. FDIC insurance fund is unsustainable
1. 84 banks have failed thus far in 2009
2. 416 banks listed on FDIC's problem bank list
a. number was 305 three months ago
b. total assets of 416 problem banks is $300 billion

3. Congress raised FDIC insurance limit to $250,000
a. originally set to expire at the end of 2009
b. has been extended through 2013
4. FDIC ratio of funds to insured deposits is .22%
a. FDIC is mandated to keep this ratio between 1.15% and 1.50%
D. FDIC has to seek more funds
1. hopefully before the fund approaches zero
a. would ignite another round of lost confidence and threat
of bank runs


NY Fed President Dudley says it's too soon to talk about curtailing long term security purchases

I. Fed purchase program of long term securities
A. Purchase $ 1.45 trillion of mortgage agency debt
1. to settle and provide liquidity and confidence to markets

II. Dudley warns too early to consider curtailing long term security purchases
A. Still premature to pull back
1. delicate economy with slow growth and high unemployment rate
2. doesn't want to disrupt market expectations which are that the program
will be executed to fulfillment

III. Divergence of opinions with the FOMC
A. Richmond Predident Lacker says Fed should consider early curtailment of the program
1. buying full amount would provide more boost than needed to economy

IV. Stimulus and moving forward
A. Fed cut rates to 0 in December and pumped 100s of billions into the financial system
to combat worst recession in 70 years
1. Fed has said downturn appears to be leveling
a. also stated that any recovery would be sluggish
B. Fed has said its confident that they can withdraw the stimulus effectively and curb
inflationary side effects
1. Dudley - we have many tools and options available at out disposal
2. Will suspend $300 billion program of purchasing long term treasuries by end of October
3. At the same time, extended emergency lending program to ailing commercial re mkt til 2010
C. Seeing many varying opinions within the FOMC itself doesn't spur confidence for me
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post #2 of 10 (permalink) Old 09-01-2009, 01:54 PM
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post #3 of 10 (permalink) Old 09-01-2009, 05:25 PM
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hey obama is in charge, we will be just fine.
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post #4 of 10 (permalink) Old 09-01-2009, 05:59 PM
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The FDIC won't make it to the end of the year. If they do they will require massive amounts of cash to do so. IMO though, they will get that from hitting the banks again. The banks are just hitting the customers even harder.
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post #5 of 10 (permalink) Old 09-01-2009, 06:33 PM
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Too bad the FED won't fail too! The Fed is what's gonna sink us in the end...
"keep them presses rollin, rollin, rollin rollin..."
The devaluation of the dollar/crazy inflation is comin folks. I'm just sayin~
Thought I'd throw in some positive thoughts for the day

"The meaning of peace is the absence of opposition to socialism.” ~ Karl Marx
"FUCK PEACE!!" ~ me
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post #6 of 10 (permalink) Old 09-01-2009, 06:44 PM Thread Starter
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Quote:
Originally Posted by TheHeadsGirl View Post
Too bad the FED won't fail too! The Fed is what's gonna sink us in the end...
"keep them presses rollin, rollin, rollin rollin..."
The devaluation of the dollar/crazy inflation is comin folks. I'm just sayin~
Thought I'd throw in some positive thoughts for the day
Eh, I don't think so. One thing's for sure, we'll all find out eventually.
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post #7 of 10 (permalink) Old 09-01-2009, 08:22 PM
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Quote:
Originally Posted by slow99 View Post
Eh, I don't think so. One thing's for sure, we'll all find out eventually.
You study business, I study History...we shall see who is correct in due time

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post #8 of 10 (permalink) Old 09-01-2009, 10:34 PM
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Ill take history for 200 please

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post #9 of 10 (permalink) Old 09-01-2009, 10:53 PM
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post #10 of 10 (permalink) Old 09-01-2009, 11:00 PM
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I LOVE my Credit Union...All I gotta do is call them up & tell them I want to buy something & I have the money within a day! LOVE them

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