Here:
Federal regulators expect bank failures to cost the deposit insurance fund about $100 billion in the next four years and the fund to fall to a negative balance this month.
That is higher than an earlier estimate of $70 billion in failure costs through 2013.
The Federal Deposit Insurance Corporation made the projections Tuesday as its board proposed requiring banks to pay in advance an estimated $45 billion in regular insurance premiums for 2010-2012.
At this point, another 100 billion to fix the incompetence of the best and the brightest who are our banksters seems like almost chump change.
Betsy
I think “green shoots” deserves an entry in the lexicon.
Morbo
Yum yum, eat ’em up.
Oh, and when teabaggers start crying “socialism” when the FDIC has to dip into its line of credit with the Fed, don’t forget how over the past several years before 2007 many banks weren’t paying their FDIC premiums because the system was just that healthy. Thanks, Invisible Hand!
Morbo
Oh, that’s right, forgot about the moderation on “sociaIism.”
asiangrrlMN
A hundred billion here, a hundred billion there…that’s how realignment happens
Oh, wait. And, I agree with Betsy. “Green shoots” deserves a spot in the BJ Lexicon.
Kay Shawn
Please, no more usage of the term “green shoots” !!!! Those green shoots are weeds!
Kay Shawn
Please, no more usage of the term “green shoots” !!!! Those green shoots are weeds!
Walker
Everyone should be aware that during the Bush administration, Congress did not allow FDIC to collect the insurance premiums that they were owed. The claim was that FDIC was overfunded and they did not need the money.
Any who claims Republicans are fiscal conservatives is a moron.
General Winfield Stuck
This was also my first thought. Wonder where the money went? Is it soshulism to make eleventy hundred millionaires now laughing their asses off splayed out on some sun soaked beach sucking down fruity drinks with umbrella stir sticks playing grabass with the local honeypots. Please weigh in MacMeghan, (or how many glibertarians does it take to screw in a dim bulb?)
The Senate Markup on HC reform is a hoot with dems taking turns making Chuck Grassley cry like a wittle baby.
gopher2b
Given that these payouts are coming from insurance for which the banks paid premiums (really depositors, but you know what I mean) this isn’t really a big deal in the grand scheme of things. This is a New Deal program that worked really, really well.
Walker
Which was pocketed by the banks and never collected.
liberal
@gopher2b:
Besides the problem that depositors might somewhat be on the hook for the premiums, there’s two additional problems:
(1) If the bill gets really large, there’s a danger it could be passed directly onto taxpayers.
(2) While I assume the FDIC has some mechanism to prevent moral hazzard—meaning, depository institutions which take bigger risks are charged more—I don’t have much faith that it fully addresses the problem.
Why FDIC limits much be so huge is beyond me. Anything more than $10K per person (none of this “per account” crap) is too much IMHO.
PeakVT
At this point, another 100 billion to fix the incompetence of the best and the brightest who are our banksters seems like almost chump change.
The difference here is that when the FDIC closes a bank it takes over, and sells the operations. The existing corporate structure doesn’t get to live on and gamble another day, which is what has happened with TBTF entities like Citigroup.
Ked
@Walker:
Really want to emphasize the point Walker brought up. For most of the last decade: Banks. Didn’t. Pay. Any. Insurance. Premiums. At all. Full stop.
So they’ve had a loan of this money for all these years, essentially, never had to pay interest on it. Sounds like a real good deal to me.
Svensker
Yup. We’r the chumps and that ain’t gonna change.
The Moar You Know
@Walker: THANK YOU. How quickly everyone forgets.
Irrelevant,YetPoignant
I love this City, this State
This Country is too large
And whoever’s in charge up there
Had better take the elevator down
And put more than change in our cup
Or else we
Are coming
Up
(cf.)
Zifnab
Man, problems like this really take you back, eh?
boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/?p…
Personally, I blame the Democrats.
gopher2b
@liberal:
You cannot be serious.
gopher2b
@Walker:
Yes, from ’96-’06 which was criminal negligence in my opinion.
The Pale Scot
Rithotz’s take
““Repeat after me: The FDIC does not run out of cash. The FDIC does not run out of cash. FDIC can confiscate all of the net assets and earnings of all FDIC insured banks. That is trillions in total liquidity. FDIC can borrow from Treasury, the Fed and even from FDIC insured banks. They can also issue notes.””
ritholtz.com/blog/2009/09/why-does-bloomberg-keep-getting-the-fdic-story-wrong/
Fergus Wooster
Meanwhile the bigger banks (read: “too big to fail”) have regained their risk appetite, and are taking enormous loan positions ($100-200MM) in hopes of investment banking fees.
One syndication I saw recently had credit metrics that sent all the small and mid-sized banks running as fast as they could. I mean the metrics are indefensible. This tier of banks would have been committing $25-30MM for a total loan facility of, say, $2 billion. The larger banks would have held $50MM or so.
Instead, the smaller tier backed away, and the larger banks doubled and tripled down to $100 and $200MM pieces. Off the record, some of these bankers have admitted that the transaction does not pass a rudimentary credit test – but they just can’t pass on the potential I-banking fees.
It starts again.
Fergus Wooster
In moderation. Sad.
tc125231
Yeah, but the chump be us.
CalD
Can we at offset some of the costs by taxing their bonuses?