Negative $8.2 Billion – that’s going to hurt….

Okay, let’s take a look at this a minute:

• The FDIC is continuing to close banks.   There have only been 6 weeks where they haven’t closed a bank yet this year. 
  
• Every time that they close a bank (and the chart was before the bank closure last Friday), they have to set aside money based on what they anticipate they are going to lose on that particular bank.

Based on those numbers, they are currently $8.2 Billion in the hole.   That means that all of the money that all of the banks have paid in for FDIC insurance isn’t enough and they need more money.

So let’s recap:

• Fannie Mae is out of money and needs capital infusions on a monthly basis.
• Freddie Mac is out of money and needs capital.
• FHA is essentially out of money but say they don’t need any additional money from Uncle Sam.
• FDIC is out of money and says that they are going to get the money by asking the banks to pay their next three years worth of dues early.   (SO WHAT ARE THEY GOING TO USE TO KEEP AFLOAT FOR THE NEXT THREE YEARS?)

Yep, all is well, nothing to be concerned about, the economy is on the mend.   Move along, nothing to see here, move along……

Tom Vanderwell

FDIC Insurance Fund Falls to Negative $8.2 Billion – Financials * US * News * Story – CNBC.com

The U.S. government insurance fund used to safeguard bank deposits dropped to a balance of negative $8.2 billion in the third quarter, the first time since 1992 that it had a negative balance, the Federal Deposit Insurance Corp said on Tuesday.

The FDIC’s balance was negative in the third quarter for the first time since 1992.

However, the FDIC has access to cash through a plan to have the banking industry prepay three years of assessments, and also has the option to tap a $500 billion line of credit with the Treasury Department.

The agency said in its quarterly banking report the decline in the insurance fund was due to an additional $21.7 billion the FDIC set aside in the third quarter for expected bank failures.

At the end of the second quarter, the FDIC’s insurance fund had $10.4 billion.

The number of banks on the FDIC’s “problem list” rose 33 percent during the third quarter to 552, the highest level since 1993. The U.S. banking industry as a whole managed to post a profit for the quarter of $2.8 billion due to growth in operating revenues and a rebound in securities values. Last quarter, the industry lost $4.3 billion.