Michael
Mar 12th 2009, 01:44 PM
That the Federal Deposit Insurance Corporation (FDIC) is bankrupt ought to surprise no one - the number of failing banks in the USA is at a record pace (more than two dozen last year, 17 so far this year).
What is truly mind-boggling though is the fact that Congress dropped the requirement for banks to pay into the fund.
WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
Source (http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/?page=full?ref=fp1)
Bonus question: how much money do you think lobbyists for the banking industry 'invested' in Congress to buy this rule change?
It really is hard sometimes to decide between "corruption" and "incompetence" as being the greater danger from Congress.
And given the present 'financial climate' I'll expect the banking sector to argue that they are too poor to pay for their own insurance and need more public subsidies for that.
What is truly mind-boggling though is the fact that Congress dropped the requirement for banks to pay into the fund.
WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
Source (http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/?page=full?ref=fp1)
Bonus question: how much money do you think lobbyists for the banking industry 'invested' in Congress to buy this rule change?
It really is hard sometimes to decide between "corruption" and "incompetence" as being the greater danger from Congress.
And given the present 'financial climate' I'll expect the banking sector to argue that they are too poor to pay for their own insurance and need more public subsidies for that.