The FDIC Situation

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