You have to hand it to Washington, our leaders have outdone themselves. While we have been distracted by the housing crisis, they have continued to manipulate strengthen our banking system until they now have virtual control over many of our largest financial institutions. In their infinite wisdom they have taken whatever measures necessary to meet their goal of keeping our banking system strong.
Now we have a report from FDIC Chairman, Sheila Bair, which shows just how effective their efforts have been. Congress should be proud; and we can now rest easy knowing they have judiciously applied trillions of our tax dollars.
The report from Chairman Bair states that the FDIC could become insolvent this year. WHAT? It was only a short time ago that the FDIC chief said that they had absolutely no concerns that the deposit insurance fund was in any danger; and that it had sufficient reserves to deal with almost any worse case scenario. So what happened?
Well, several banks have failed, costing the fund more than 15 billion dollars in the fourth quarter alone; and the FDIC expects “a large number” to fail this year. To compensate, the FDIC is raising fees to banks and is expected to assess an emergency fee just to keep up with anticipated failures.
Is there more to come? The government isn’t going to tell us, but common sense says yes, when AIG lost an average of 28 million dollars an hour during the fourth quarter of last year, and Citigroup is now trading for $1 per share. So give our leaders credit; they need it now more than ever!
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