In the Day Ahead, WSJ reporter Kelly Evans reports that the FDIC insurance fund is low, and that the agency may have to borrow funds for the first time since the savings and loan crisis.
8/27/2009
"Always borrow money form a pessimist, he doesn't expect to be paid back." —Author Unknown
Staying with the belief that the Fed can still do more, Bernanke said they are prepared for more accommodation if needed but he finally publicly acknowledges that "central bankers alone cannot solve the world's economic problems." He gives color on what left the Fed can do if circumstances warrant but acknowledges drawbacks to each perceived benefit. On the economy, "although private final demand, output, and employment have indeed been growing for more than a year, the pace of that growth recently appears somewhat less vigorous than we expected...Much of the unexpected slowing is attributable to the household sector, where consumer...
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August 27th, 2009 at 4:01 pm
Ain’t really a big surprise, is it, this one…?
August 27th, 2009 at 4:34 pm
as usual these news are completely wrong or at least misleading. The FDIC’s funds are the entire capital of the banking industry; the so called “fund” is just an account into which it put advance payments. The FDIC can charge all member banks any amount needed to pay out depositor money at a failed member institution.
The FDIC only runs a scheme, it does have no capital and is not an insurer; deposit insurance in the USA is a pay-as-you go self-insurance system, where all money paid to depositors is owed by all other banks, not by the FDIC.
The FDIC may borrow money from the Treasury only to spread out the payments from non-failed member banks to depositors of failed member banks.
http://www.fdic.gov/news/news/press/2008/pr08084.html
«As per our authorizing statute, any money we might borrow from the Treasury must be paid back from industry assessments.»
«The fund is 100 percent industry-backed. Our ability to raise premiums essentially means that the capital of the entire banking industry – that’s $1.3 trillion – is available for support.»
«The FDIC receives no federal tax dollars – insured financial institutions fund its operations.»
August 28th, 2009 at 4:20 pm
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