The F.D.I.C Borrows Money?
This past week, I was reading about the FDIC saying they needed to borrow money. If that isn’t an oxymoron! To boot, the FDIC was concerned that American would be worried if they started taking more money from their 100 billion dollar line of credit from the Treasury, so they looked to healthy banks to borrow money from at this time. (source zerohedge.blogspot.com)
Wait a minute, borrow money from healthy banks? Is the F.D.I.C out of their mind? Didn’t we have one of the major meltdowns in history over poor business principles? Now, there are proponents who think this may be a good idea. Good luck when your bank goes out of business. Maybe it will be a teller who comes in from another bank, and not the F.D.I.C. if your local bank goes under.
The F.D.I.C was formed following the signing of the Banking Act of 1933 (also known as the Glass-Steagall Act). Prior to that time, bank customers were at risk of losing all of their money if their bank failed, and bank runs were a common occurrence.
The F.D.I.C was originally funded with “just” $289M in loans from the U.S. Treasury and Federal Reserve. While this has grown to tens of billions of dollars (currently $10B, but headed to $40B with the accelerated premium payments), they’re currently insuring $4.8 trillion in deposits. (source Five Cent Nickel)
I guess at the end of the day, we can insure whatever we want to on paper. Makes you wonder just how much our precious land we have deeded out to insure our deposits?
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