How Safe Is My FDIC Bank Account?
77Bank Capital Requirements Will Be Raised
We know that bank capital requirements will be raised. One of the reasons is that banks are leveraging up again, and because commercial real estate is on the brink.
This increased capital requirements is a function of the New World Order financial system. We know that the possibility of a run on the banks is quite high still. The bank crisis is in more dangerous territory than it was before. Again, there is no security market for many types of securities. Where are we going to stuff all the commercial real estate and residential real estate loans if investors don't want to buy them? Housing has always lead the US out of recession. But without investors, will housing rates have to go up? Of course. And will this bode well for banks? No.
The only way that rates will stay low is if the Fed scares people into buying bonds out of fear that the market is way overpriced. I have written about that here.
Update: Guest on Kudlow Says Banks Must Have Healthy Security Market.
Kudlow almost had a heart attack, as a professor today (8/27/2009), said that the banks will not succeed without the security market, you know, the bundled loans that killed the banks the first time!
Fact is, he said, deposits will not save the banks! He acted like a positive guy but threw this curve at the end of the interview. I would say this is a really massively disconcerting prediction. I would say also that banks are still in a whole lot of trouble. Sure, the government will back the banks in the near term, but what if this securitization never materializes? What then? I would say that the prognosis is not good if the CDO's don't come back.
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How Safe Is My FDIC Insured Bank Account?
Update: The congress has given the FDIC a 100 billion dollar credit limit, in essence tripling this credit limit. And yet the FDIC continues to eat through their reserves. While this extra credit limit could bring temporary stability to the program, it all depends upon the economy and how banks fare in this tough economy.
Update: Head of FDIC on 2/26/09 has said that this is one of the most difficult periods in the history of the FDIC. That is a warning folks. It is subtle, but it is a warning.
And have you noticed how many programs and comments have been made about good local banks, and about how good FDIC is? You know why this orchestrated charade is going on? Well, it is because the banks are being raided everyday as people are pulling some or all of the money out for safekeeping in case there is a bank systemwide meltdown.
Readers, I urge you to please pay attention as this information is important! Did you know that there was a run on the banks in September 2008 that threatened the American banking system? Oh, the mainstream useless media didn't tell you?
550 billion dollars were withdrawn in a little less than two hours. Had this not be stopped, up to 6 trillion could have been withdrawn, ruining the financial system of the United States and the world. But wait, I thought FDIC prevented the destruction of the financial system. Well not according to one congressman.
The banks have serious issues relating to their solvency. First, many have taken out money they have in excess of the FDIC insured limit, which has been temporarily bumped to 250 thousand dollars. As people take money out the banks, minimum capital requirements are tested. Add credit card defaults that are raging, and commercial real estate that can tank soon, as well as bad second and third tier assets that are getting worse every day that we wake up, and we need to seriously take a closer look at the FDIC act that created the corporation in the first place.
FDIC insurance has little more than once cent for every dollar in deposits. But people have always been confident in the system which was established in 1933 as a way of stopping runs on banks. Bank runs tended to make depressions worse. Since I believe we could be facing the mother of all depressions, it is necessary to take a look at the FDIC, and the risks involved.
Certainly, if a few smaller banks fell, then the FDIC would have no problem meeting its obligations, but if a run on many banks occurred, it would only be able to borrow from the treasury a total of 30 billion dollars at any one time. Clearly, a multiple bank run in the United States could result in over a trillion dollars of outflow in the matter of a few hours. If you read the FDIC act, you will see that the most that can be taken out as a loan from the treasury is 30 billion dollars. In today's money, this is a thimble compared to the trillions of dollars of liabilities that are lying around on bank books coupled with possible hundreds of billions or trillions of simultaneous withdrawels.
Furthermore, the FDIC corporation does not have to make immediate payment on the insured amount but can do so as soon as possible. There are situations that could cause such a meltdown that this payment would require congressional approval, and under certain circumstances these payments could be difficult to make.
Be sure to check out the video below regarding the meltdown in September as well as the links which explain how the FDIC works in more detail.
Bottom line: the financial meltdown that could be caused by the average citizen taking out money is not likely, but is possible if serious deflation hits and if the housing market deteriorates beyond what most think. And I believe that this is a real possibility. The question then becomes whether we can sell our treasury bonds without interest rates rising, which would add to the slowdown.
Will people start taking money out under the insured limit as we see a deterioration with the demise of say, a Nordstrom, or JC Penny, or Sears, or Saks or a Tiffany? We all have heard that these retailers are a whisper away from bankrupcy. It is something to ponder as we see the deterioration in the biggest credit bubble in the history of mankind.
Update: Nouriel Roubini's Must Read Comments
The link for this article is below with the other links:
Nouriel Roubini, the New York University professor who predicted the global credit crisis, said a government-backed bank ''may crack'' as officials try to bail out their financial systems.
''The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,'' Roubini wrote on his Web site today. ''At some point a sovereign bank may crack, in which case the ability of the governments to credibly commit to act as a backstop for the financial system -- including deposit guarantees -- could come unglued.
What Roubini is saying is not necessarily that American banks could find themselves in this situation, that it is more likely that European countries could have this problem. But deflation is a contagion, and so is confidence in the banking system.
Where do you keep your money?
Where do you keep your money?
See results without votingThe Near Meltdown in September 2008
Serious Theory About the Bank Run although those with Motive were the Moneychanger International Bankers.
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FDIC on Amazon
FDIC and Bank Links
- Is The FDIC Broke And Covering It Up? - The Market Ticker
- Bank-Abuse.com Moneychangers Video
Banks have abused people from time to time in history. Banks generally are to be trusted to lend, underwrite and profit in a fair manner. However, that has not always been the case. The agrarian movem - More mortgage Meltdown
Important PDF showing dangers looming for banks. - The Abuse of the Middle Class by the World Elite
Clearly, the economy of the world appears to be tethered to the spending habits of Americans. But the abuse of that very middle class by the Bush administration for eight years and by the banks during that... - Welcome to Pay-Credit-Cards.com Get Debt Solution Information
I hope that you realize that there are three solutions to credit card debt if you are over your head. There are two nonsolutions. Those are: 1. Don't take money out of your 401k to pay off credit c - How Safe is My FDIC-Insured Bank Account? :: The Market Oracle :: Financial Markets Analysis & F
How Safe is My FDIC-Insured Bank Account? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website - What if Your Bank Fails? Facts about FDIC Insurance
Chances are you've seen the news footage of angry, frightened customers lined up for blocks outside California's IndyMac Bank to get at their money before, or just after, IndyMac's recent bankruptcy. The FDIC... - Roubini warns of \'sovereign\' bank failure
Dire warnings from Roubini, the most accurate predictor of the meltdown. - Why Are Banks Too Big To Fail?
I am thoroughly disgusted with congress, the fed, banks and all the idiots that run our financial system. I have patiently waited for those paid shills in congress to ask the question: Why Are Banks Too Big... - Alt A Chart
Alt A meltdown chart. - Class Warfare
Update, the cramdown plan of the Obama administration will help some homeowners, but the effect of preventing investors from suing will be higher interest rates in the future. That means it is not a good idea... - Change Alley: George Soros: Bottomless Market
Predictions worth reading about. - Why Banks Must Be Crushed
This website (hub) is a call for a bill of rights against banks. It is a call for a restoration of privacy, for a restoration of sound banking practice and for a cessation of the war by Wall Street on the... - How Safe is My FDIC-Insured Bank Account? :: The Market Oracle :: Financial Markets Analysis & F
How Safe is My FDIC-Insured Bank Account? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website - Federal Deposit Insurance Corporation - Wikipedia, the free encyclopedia
Must read information about the FDIC and the act that created it. - Is America a Fascist State?
Franklin Roosevelt defined fascism as government being owned by a private individual, group or organization. It is my view that under the authority of George W. Bush, the oil companies of the United States...
Bank Failures in the News
- Bair Wants Secured Creditors to Pay in Bank Failures (Update1)Bloomberg5 days ago
Nov. 24 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said secured creditors should have to help pay for the costs of bank failures that are big enough to threaten the financial system.
- Bank files 2nd motion against T.H.P.The Mercury10 hours ago
A lift-stay motion filed earlier this month on behalf of Bank of America against T.H. Properties has resurfaced in bankruptcy court with an additional motion filed this week.
- As bank failures rise, FDIC fund falls into redGreater Baton Rouge Business Report4 days ago
(From The New York Times ) The government-administered insurance fund that protects depositors fell into the red for the first time since the fallout from the savings-and-loan crisis of the early 1990s as the pace of bank failures accelerated.
- Small Florida bank shuttered, 124th this yearPark Hills Daily Journal15 hours ago
WASHINGTON (AP) — Florida banking regulators on Friday shut down Commerce Bank of Southwest Florida, marking the 124th U.S. bank to succumb this year to the struggling economy and rising loan defaults.
- Taylor Bean and Colonial Bank failures could cost Freddie Mac $1BSt. Petersburg Times5 days ago
The failures of Taylor Bean and Colonial Bank could cost the home loan guarantor $1 billion.
- Taylor, Bean & Whitaker and Colonial Bank failures could cost Freddie Mac $1BSt. Petersburg Times5 days ago
Federally run home-loan guarantor Freddie Mac said the ripple from failures of Ocala-based Taylor, Bean Whitaker and Colonial Bank could cost it more than $1 billion to clean up.
Credit Crisis Timeline
- News from around the web: 2009-11-28
Mark Pittman, Reporter Who Foresaw Subprime Crisis, Dies at 52 – Bloomberg.com (R.I.P.) Audit would hurt economic prospects: Bernanke | Reuters (I doubt many believe this) London Luxury Home Prices Increase for First Time in 17 Months – Bloomberg.com Pimco: Dubai triggers overdue correction | Reuters German banks tipped to write off €90bn as the [...] - 30 hours ago
- Cease and desist and other FDIC administrative orders
A lot has been made of the most recent FDIC quarterly report, especially the large increase in problem banks to 550 – at least in the blogospehere; some media outlets seem to be burying this news. Underneath this news are the specific stories about troubled institutions, some of which the FDIC chronicles in its monthly [...] - 3 days ago
- The bust in Dubai and exogenous shocks
By now you have heard that Dubai World, the investment company, has asked its creditors for a six-month delay in repaying its debt (see articles in links). This is what is commonly referred to as default. Now many are wondering if Dubai the country is on the verge of default and asking who is most [...] - 3 days ago
- News from around the web: 2009-11-27
Dubai’s dramatic boom over the last decade in pictures – Telegraph BBC NEWS | Americas | Facing a sixth trial for the same crime BBC NEWS | Middle East | Views from Dubai: ‘The end of the dream’ Dubai debt delays revive fear of financial crisis FT.com | Willem Buiter’s Maverecon | Polite suggestion to [...] - 3 days ago
Credit Crisis in the News
- Dubai Credit Crisis Impact on CasinosOnline Casino Reports15 hours ago
The Dubai credit crisis is threatening the good order of the global economic system. Among potential casualties who might incur damages from Dubai's troubles: casino gambling.
- Citigroup Denies Brazil Was Offered Stake During Credit CrisisBloomberg3 days ago
Nov. 26 (Bloomberg) -- Citigroup Inc., the bank owned 34 percent by the U.S. government, said it didn’t offer Brazil a stake in the company amid the credit crisis.
- Dubai credit crisis sends stocks tumblingSt. Louis Post-Dispatch2 days ago
NEW YORK — Dubai's debt crisis points to the vulnerability of the global economy.
- As credit eases, leasing comes backPioneer Press20 hours ago
Auto leasing, temporarily crippled by the credit and financial crisis, is making a comeback this fall.
- Stocks slump as news of Dubai debt crisis sinks inLos Angeles Times2 days ago
The Dow Jones industrial average closes down 154 points, a slight recovery from earlier losses. World markets react strongly to Dubai's announcement that it would freeze its debt repayments. Stock markets sank in the U.S. and Asia on Friday as investors scrambled to determine whether a debt crisis in the Middle Eastern emirate of Dubai would infect credit markets around the globe.
- Dubai crisis rattles marketsEverett Herald18 hours ago
NEW YORK — Dubai’s debt crisis raised concerns Friday that some banks could further tighten lending and stall the global economic recovery. The possible spillover effects centered on fears that international banks could suffer big losses if Dubai’s investment arm defaulted on its $60 billion debt.
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Comments
I found a very good website about this stuff - http://www.bank-ratings.net
Hi, PGrundy. Excellent post. However I would not take down the hub. I would update it with the information like what you have posted here. I have a new hub about not paying your credit cards. I hope you would read it.
Here is the deal. the bad bank idea saddles the taxpayers with the crap. Actually if big retail tanks, the banks are in greater danger than if their credit card business tanks. They would lose both the inventory interest payments and the commercial real estate payments. And commercial real estate tanking is a downward spiral of blight.
So, they are desparate for people to spend. The US can always nationalize the banks, but big retail mass failure will cause blights in the best malls throughout the United States.
Hi bgamall--FDIC can only protect deposit money if there are a limited number of bank failures and the banks aren't too big. That's why ever since the first TARP package was passed Treasury Secretary Paulson spent much of the money brokering the sale of failing banks to larger, somewhat healthier banks so that the wave of failures would seem smaller. The bank I worked at until October of 2008 was sold in this way. My bank applied for TARP funds and was denied on the grounds that it was insolvent, then the funds were given instead to another bank with the stipulation that it had to use part of the funds to buy my old bank. It didn't want my bank--it had to buy it to get the TARP money. So the money that was meant to clean up bad assets was spent in part to prevent a waive of FDIC seizures. It freaks people out to see that. Plus FDIC doesn't have the money.
Now, it you watch the news, they make it sound like the banks are buying up other banks with government money because they want to--They're doing it because they HAVE to in order to get their hands on the money. Our own government brokered these deals so people wouldn't panic at a waive of failures and cause a run on the banking system in general. We're closer to that that anyone realizes.
I should take down my FDIC hub. I wrote it when the level was still 100K, back when I still worked at the bank, because we got so many calls about it. But I don't think it's accurate anymore. First, it IS $250K now, and second, FDIC can't protect your deposits if it gets that bad---and it is getting that bad. Nevermind Sears, what if Citi fails? Citi is insolvent and everyone knows it. It's a behemoth--one of the top credit card issuers in world.
I don't see an easy way out of this mess. I don't think the 'bad bank' idea will work. It's not the same as with the S & L crisis of the 90s. NOBODY knows what these toxic assets are worth, and few even understand them at all. If the Treasury Dept buys them at a sane price, the banks fail anyway. If it pays too much, the U.S. government holds toxic paper that may or may not be saleable. I think we are in really bad trouble, way worse than most people think, and most people think it's really bad.











bgamall says:
5 months ago
To a point that is helpful information, however if there is a financial system meltdown and multiple runs it may not help you.