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)Bloomberg2 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.
- As bank failures rise, FDIC fund falls into redGreater Baton Rouge Business Report2 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.
- Taylor Bean and Colonial Bank failures could cost Freddie Mac $1BSt. Petersburg Times2 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 Times2 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.
- What happens if your bank fails?Chicago Tribune26 hours ago
The number of bank failures this year is beginning to rival the number of institutions shuttered in 1992, at the finale of the savings-and-loan crisis.
- Proposals to limit impact of bank failuresBusiness Times (Malaysia)12 hours ago
GENEVA: Central bankers yesterday issued recommendations aimed at limiting the spillover impact when international banks are being wound up, in a bid to prevent a repeat of the financial crisis.
Credit Crisis Timeline
- News from around the web: 2009-11-25
Geithner’s Disgrace – Eliot Spitzer FT Alphaville – FDIC’s insurance in the red, ‘problem banks’ hit 16-year high Should America worry about its deficit? | The Economist House prices ‘must drop radically’ to lure investors – Irish, Business – Independent.ie America’s increasing food waste is laying waste to the environment GM confirms Germany will bear [...] - 2 days ago
- The U.S. Dollar is now at parity with the Swiss Franc
Benchmark Currencies: 16 Dec 2008 Nearly one year later and the U.S. dollar is looking very weak – and not just against the Euro, but also against Sterling and Swissy, and especially against the Loonie and the Aussie Dollar. Even the Japanese Yen is up against the U.S. Dollar. And of course, the Chinese Yuan is [...] - 2 days ago
- Unemployment claims lowest in 15 months
Unemployment claims dropped dramatically to 466,000 this past week. This is the best data on the unemployment front we have seen in a long time. The prior week’s claims were also downwardly revised for the first time in a while. These changes brought the widely followed 4-week average down to 496,500, the first time we [...] - 2 days ago
- New York to use eminent domain to build a basketball stadium
The New York State Court of Appeals has ruled that the Atlantic Yards basketball project can go forward as planned, dislocating the residents in the Brooklyn, NY area where the stadium is to be built. In essence, the decision means the state can evict you from your own home, seize your property, and give you [...] - 2 days ago
Credit Crisis in the News
- Citigroup Denies Brazil Was Offered Stake During Credit CrisisBloomberg7 hours 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 debt delays revive fear of financial crisisWashington Post1 second ago
DUBAI/TOKYO (Reuters) - Investors recoiled from risky assets on Friday and dumped shares in Asian banks and builders, fearing a Dubai debt default could reignite the financial turmoil of the credit crisis.
- Bank looks at making credit crisis aid permanentMalaysiaNews.net2 days ago
OTTAWA -- The Bank of Canada is studying whether some of the extraordinary liquidity supplied during the credit crisis should be made permanent to ensure the smooth functioning of financial markets. ...
- Credit card spending spree is backBrisbane Times1 second ago
Credit comparison websites are predicting a consumer debt resurgence for the festive shopping season as consumers switch from debit cards back to credit cards.
- The Trouble With a Sovereign Debt CrisisThe Daily Reckoning33 minutes ago
The trouble with a sovereign debt crisis is that you just never know what the tipping point is going to be. Things can be travelling along nicely with apparent stability and suddenly you find yourself in the middle of a crisis. For the last month we've been warning about a sovereign debt crisis in the Western Welfare states.
- Dubai debt delays revive fear of financial crisisThe Economic Times1 second ago
Dubai debt delays revive fear of financial crisisDubai debt delays revive fear of financial crisis
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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.