Community | September 22, 2009 | 5 comments

Feds (FDIC) may be asking Banks to bail them out

source: http://www.nytimes.com/2009/09/22/business/22bailout.html

Image
bansheewail
WASHINGTON — Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Federal Deposit Insurance Corporation Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.

A hallmark of the financial crisis has been the decision by successive administrations over the last year to lend hundreds of billions of taxpayer dollars to large and small banks.

“It’s a nice irony,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a consulting company. “Like so much of this crisis, this is an issue that involves the least worst options.”
  1. groups:
    Community,   Current Tonight
  2. tags:
    News,  News and Politics,  US Politics,  Bailout,  4 more
  3.     
    |

5 comments // Feds (FDIC) may be asking Banks to bail them out

  • sampierre
  • neocongo
    • 0
      neocongo  

    • The FDIC over sees small "hometown" banks where as the bailouts went to massive holding company banks, so it's not the same banks receiving the bailouts that are covered by the FDIC.

      Having said that, I agree with Tbowman. Borrowing money from these banks is a horrible idea, particularly when the government is developing regulation for them. It would be too much leverage to undermine that regulation.

    • 2 years ago
  • Progresshiv
    • 0
      Progresshiv  

    • Once I opened a new credit card and used it to pay off the balance of the old credit card. Unfortunately, I stilled owed the money. Dang!

    • 2 years ago
  • tbowman131
    • 0
      tbowman131  

    • the FDIC has always been funded by fees on the banks. its their insurance program. it would be like saying we are bailing out the insurance companies when we pay our premiums.

      "Borrowing from the industry is allowed under an obscure provision of a 1991 law adopted during the savings and loan crisis. The lending banks would receive bonds from the government at an interest rate that would be set by the Treasury secretary and ultimately would be paid by the rest of the industry. The bonds would be listed as an asset on the books of the banks."

      If it is the case that the interest would "ultimately...be paid by the rest of the industry" i have no issues. but if the FDIC wants to borrow money from the for-profit banking industry when they could just as easily borrow it from the Fed at 0-0.25% would be insanity... especially considering they could be loaning us back the money we gave them in the TARP!

    • 2 years ago
  • bansheewail
more from Community:
from the community

top videos