SubscribeFDIC Needs Bailout
The existing $30 billion credit line “provides a thin margin of error” to cover losses from bank failures, Bair wrote yesterday in a letter to U.S. Senate Banking Committee Chairman Christopher Dodd. Dodd, a Connecticut Democrat, plans to introduce legislation to raise the borrowing authority to a permanent level of $100 billion and temporarily increase it to $500 billion through Dec. 31, 2010.
The assessment was aimed at rebuilding a fund the FDIC uses to repay customers for deposits of as much as $250,000 when a bank fails. The fund, drained by 25 bank shutdowns last year, fell to $18.9 billion in the fourth quarter from $34.6 billion in the preceding three-month period, the agency said.
My comment: The FDIC who is supposed to back stop your bank deposits now needs money from the Treasury as the fees the FDIC collects from banks do not cover the all of the recently failed banks. The question is again asked can the Treasury and FED bail everybody out? My view is that they cannot but they are determined to try.
John Polomny
The Real Deal
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