moldybluecheesecurds 2

Monday, September 21, 2009

Looking to Healthy Banks to Lend to the F.D.I.C. -

This is what we call irony. The FDIC, protector of your bank deposits and banks alike, has been drained by all the bank failures and now wants to borrow from banks to keep going rather than assessing the banks. Reason #1 this is a bad idea:
"Bankers worry that a special assessment of $5 billion to $10 billion over the next six months would crimp their profits..."
Cry me a river. This fund exists to protect depositors, not banks with poor decision making. Plus, what happens if the banks lend to FDIC? They get interest!

The only possible reason that borrowing from healthy banks seems like a good idea is that it's fairer to the good banks, who are otherwise assessed along with the failing banks.


1 comment:

rick said...

Note the sentence at the end where it says that the interest would ultimately be paid by the industry. This makes sense if the FDIC is entirely funded by assessments on the industry.

Thus, this seems like a mechanism to delay the assessment until a time when such action would be less likely to lead to additional failures.