[AirlinePilot]

The main problem with backstopping the FDIC is how far will it go? This is the stuff bank runs are made of.
At some point either the bond market or the dollar has a dislocation due to all this crap. It cannot go on forever like some may think.

The math just doesn't work out.

[truecougarblue]

C'mon AP, math is HARD!

[Sixstrings]

It's hard for me to get concerned about the FDIC, since essentially all private debts are / will be nationalized. It goes something like this.. our banks package up and sell toxic mortgage-backed securities to foreign banks, then they get to turn around and trade them to the fed for US Treasurys. See how that works? It's a nationalization of private debt.. when credit card defaults get bad enough, they'll do the same thing.

So then, who really cares if the FDIC is in the red? Everything's in the red, but it's all ultimately guaranteed by the full faith and credit of the United States government.

[patience]

I dunno 'bout you all, but I ain't got much faith in the gubbermint. Take a look at how they manage THEIR (our) money. Nuff said.

[AirlinePilot]

The main problem lies in the fact that the larger banks still hold large amounts of the "toxic assets". The PIPP didnt work and wont work. At some point the truth will have to be unveiled and with an FDIC needing to be completely backstopped...well the problem becomes exponential at some point.

All bad.

[ian807]

It ends either with hyperinflation or default. There's nothing else to wipe out that much debt in our lifetime. If it's not wiped out, we have stagflation at best, a jagged downward decay with severe drops in economic activity at worst. In the long run, the debt is just not sustainable.

I keep looking for a good outcome. Can't see one. Anyone get a better scenario?

[hillguy57]

I got a letter from my bank yesterday. It
said they were being put on the troubled bank list. Then it went on for about three pages about how I shouldn't be worried with the FDIC backing it up
blah ,blah blah. There are about six branches and I frequent 4 or 5 .Staff has been halved in all and the look on the faces of the people handing you your cash is unsettling at best.

[BigTex]

My bank died last week.

I'll bet it's great for the sign making business.

They're still trying to get all those Washington Mutual signs replaced from last year.

[IslandCrow]

More trouble on the way, although this report indicates that the FDIC is not out of money (yet):

$this->bbcode_second_pass_quote('', 'T')he number of problem US banks rose to the highest level in 15 years between April and June, the industry's regulator has revealed.

The Federal Deposit Insurance Corporation (FDIC) said 416 banks had failed its test criteria during the quarter, up 111 from January to March.

It added that 81 US banks had now been forced to close this year.

The FDIC judges banks on criteria such as the quality of their outstanding loans and the reserve funds they hold.

The regulator said that due to the large number of failed banks, its deposit insurance fund - which safeguards up to $250,000 (£154,000) per personal bank account - had fallen by 20% between April and June to $10.4bn (£6.4bn).

While this was the lowest the fund has been since 1992, FDIC chairman Sheila Bair said she had no plans as yet to ask the Treasury for more funds.

However, she said it was likely that banks would have to pay an additional fee to help replenish the fund.

[patience]

CNBC Story: http://www.cnbc.com/id/33061278

Quote: "The Federal Deposit Insurance is expected to take the unprecedented step of collecting banks' regular premiums early to inject cash into the shrinking deposit insurance fund."

They already had a "special emergency fee" this year. Sounds like they don't want to borrow from the US Treasury, per Marketwatch:
FDIC meets again to tackle funding needs

How safe is YOUR money?

[timmac]

The FDIC is broke and now the Social Security is broke, California and many other states are broke, many cites are broke and so on, Why in the Hell don't we America just file for BK and do away with all the debt and start fresh and clean, I am ready for that change, anyone else ready ???.

[DrBang]

How about you guys scrap the dollar and the debt and roll out a new currency. You could call it a catchy name like the AMERO. While your at it, you could stream line the US into a new look country and co operate more closely with your neighbours. You would have to do it with a new look style. Say the North American Union.

The circumstance we all find ourselves in has been engineered.

A lot of people won't like to hear that but the evidence is mounting.

[Cloud9]

I signed on for the United States. The North American Union would be a breach of contract.

[seldom_seen]

This is not good for consumer con-fidence.

[Sixstrings]

$this->bbcode_second_pass_quote('patience', 'C')NBC Story: http://www.cnbc.com/id/33061278
$this->bbcode_second_pass_quote('', ':') "The Federal Deposit Insurance is expected to take the unprecedented step of collecting banks' regular premiums early to inject cash into the shrinking deposit insurance fund."
They already had a "special emergency fee" this year. Sounds like they don't want to borrow from the US Treasury, per Marketwatch: linkHow safe is YOUR money?

[Cloud9]

The FDIC being short of cash is a non issue. We all know that unlimited amounts of money can be conjured up simply by pressing the print button.

[AirlinePilot]

The issue of the FDIC being broke is most definitely a serious issue. It points directly to consumer confidence and the health of the major banks.

This is the kind of thing which causes bank runs. It also points to a desperate situation with regards to furhter bank failures and where does the money come from to supply the FDIC insurance.

We are running out of bullets to plug the holes in the dike. Dont let them fool you, that money that they are appropriating through the three year bank fee acceleration is coming from one place.

Your pocket.

Its just another way for the Government to rob the sheeple without them understanding what is going on. Its another part of a desperate attempt to prop things up for just a little bit longer while completely ignoring the mounting debt.

[Revi]

The FDIC is one of the bankrupt entities along with the banks and perhaps the entire US gubmint.

Read this cheery assessment by Denninger today: http://market-ticker.org/ Hard to argue with him.

The FDIC won't borrow from the Treasury. Why is this? Could it be that the people who are holding up our dollar have told them no more credit?

No more dollar printing.

[Cloud9]

The FDIC will be backed. Otherwise, the system implodes in a bank run.