Posts Tagged ‘FDIC’

More On The FDIC Situation

Monday, August 31st, 2009

On August 7th I posted some commentary titled “The FDIC Situation.”  Here is a story from The Wall Street Journal that does a good job of summarizing the situation there:

http://online.wsj.com/article/SB125137695691263385.html?mod=djemalertNEWS

One of the statistics of interest:

“The FDIC’s insurance fund, which guards $6.2 trillion in U.S. deposits, fell to $10.4 billion at the quarter’s end, the lowest since mid-1993.”

While there are many variables that will determine the ultimate figure the FDIC may need to cover its guarantee obligations, it seems as if this situation could well become very significant.  Many trends and conditions seem to be aiding the possibility of bank failures.

SPX at 1028.93 as this post is written

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The FDIC Situation

Friday, August 7th, 2009

Ever so often I come across a story concerning the FDIC and its wherewithal to be able to cover its potential commitments.

It appears to be exceedingly thinly funded in relation to potential liabilities.  This may not be a big issue going forward if the economy improves; however, it could become a very large issue if the economy deteriorates from here.

While there is little doubt that the government would lend additional funds to the FDIC, if needed, it is one more item that could serve to significantly bolster the nation’s level of indebtedness.

One is led to wonder how purchasers of U.S. debt view the rising level of indebtedness, as well as the potential for all of the various federal “guarantees” of assets to add to the debt level.

 

SPX at 997.08 as this post is written

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