FDIC May Ask Banks for a Bailout

FDIC May Ask Banks for a Bailout

Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.
 

Aerogal

USMC 1983-1995
Capitalist pigs bailing out the government? Too bad Michael Moore didn't show this side of the coin in his new movie (which I will not spend one cent to see).
 

bcp

In My Opinion
If the banks go in and bailout the government, I fully expect there to be conditions on that bailout, not unlike those imposed on GM when the goverment bailed them out.
First thing is to get rid of the leader that foolishly spent trillions of dollars that did not exist.
then reduce the pay of all elected officials.
turn the government back over to the people.
 
I don't think this is all that likely to happen, but the idea is certainly well received by banks. The reality is that, because of a rash of small bank failures, the deposit insurance fund has been drained to about $10 Billion. At current deposit insurance rates, it would take a while for the fund to get back to where the FDIC likes to have it - and who knows how many more bank failures still have to be worked through.

So, one way or another, they need to raise $10 or $20 Billion. It would seem that would most likely be done through increases in insurance rates. So, from the banks' perspectives, loaning the FDIC the money instead of having to give it to them, is a more desirable alternative.
 
FDIC Seeks To Raise $45 Billion Through Bank Fee Prepayments

WASHINGTON -(Dow Jones)- The Federal Deposit Insurance Corp., faced with a deposit insurance fund expected to be in the red by the end of Wednesday, moved Tuesday to raise $45 billion by having U.S. banks prepay their premiums for three years.

FDIC staff are proposing a multi-stepped program that will require banks to prepay their assessments for 2010 through 2012 when they pay their fourth- quarter premiums at the end of 2009. Additionally, banks will face a 3-basis point increase in their premium rates beginning in 2011.

The radical move comes as the condition of the U.S. banking industry continues to deteriorate. Officials said the number of problem banks and assets has " increased rather significantly" in recent months, increasing the FDIC's estimated cost of bank failures to $100 billion from $70 billion from 2009 through 2013.

"Asset quality problems among insured institutions are not expected to abate in the near-term," the staff said.

FDIC Chairman Sheila Bair told reporters Tuesday that the agency has "tons of money" and assets to continue to protect depositors in the event of a bank failure. The proposal is aimed at ensuring the banking industry continues to pay for the deposit insurance the FDIC provides to the industry.

They apparently decided not to 'borrow' the money.
 
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