Sorry to bring you more bad news - but cable TV isn't even talking about this one, and you really should know about this since you most likely have money in a bank somewhere.
With all of the failing banks this year (95) it is no wonder that the Federal Deposit Insurance Corporation (FDIC) is now broke.
No surprise here.
The FDIC has stated that it expects the Deposit Insurance Fund reserve ratio to be negative as of September 30. As of today, depositors have no insurance. FDIC's statement is here.
Pursuant to these requirements, staff estimates that both the Fund balance and the reserve ratio as of September 30, 2009, will be negative. This reflects, in part, an increase in provisioning for anticipated failures. In contrast, cash and marketable securities available to resolve failed institutions remain positive.
To top it off, the FDIC has now raised its expectation for bank failure costs from $70 billion $100 billion! Of course, all those "green shoots" withstanding, we can expect those numbers to continue to climb.
Staff has also projected the Fund balance and reserve ratio for each quarter over the next several years using the most recently available information on expected failures and loss rates and statistical analyses of trends in CAMELS downgrades, failure rates and loss rates. Staff projects that, over the period 2009 through 2013, the Fund could incur approximately $100 billion in failure costs. Staff projects that most of these costs will occur in 2009 and 2010. Approximately $25 billion of the $100 billion amount has already been incurred in failure costs so far in 2009. Staff projects that most of these costs will occur in 2009 and 2010.Of course the DIF has a statutory minimum requirement of 1.15% of all insured deposits (a shortfall of a mere hundred billion or so). So what happened to all that reserve? Hmmmm. looks like it has evaporated. It appears that part of the FDIC’s problem is that it didn’t collect enough revenue over the years to cover today’s losses.
One commenter over at Zerohedge said this:
This is why the phrase "In God We Trust" appears on each note, because there is nobody left to trust who works in the Federal Government. We're broke, the party is over.In case you hadn't noticed - this is one reason why banking fees are on the rise. Heck, if they get real desperate you might even see a $500 overdraft fee... LOL (ok I guess that isn't really funny). But honestly, they are trying to rake in whatever tidbits they can lay their hands on. Your bank fees will go up substantially, if they haven't already.
Banks have over extended themselves and have put your money in over priced homes and unfinished shopping malls and skyscrapers. They have lent out money to people who could not, and would never have been able to pay back their loans.
The foreclosures continue to pile up and the FDIC is broke.
One good thing is that at least they are being honest about it - instead of all the dolts on MSNBC, etc., who have been candy coating the economic news to make it sound like things are good when they really aren't.
Just thought you should know.
But no run on the banks please - it'll just make things worse.
I smell another big taxpayer funded government bailout - printing presses on full steam ahead.
Perhaps we should all invest in paper and ink?