The FDIC is Broke
Posted by Ray on September 29, 2009 under Main | 
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It is funny that we are not hearing about this on the evening news or CNBC, but nothing really surprises me anymore. Those who read my work regularly know I speculated that the FDIC was basically broke, well, today they announced just that. As of September 30th, tomorrow, the FDIC is broke. This is why they are trying to raise money through making banks pay 3 years worth of premiums all at once.
Considering there are 416 banks on the FDIC “troubled” list I am sure we will see tens of billions more in failures. This leads me to believe that even the amount of money that the FDIC raises from its member banks will probably not be enough to cover the additional losses it will suffer. One also has to remember the infamous loss-share agreements which mean the acquiring bank has relatively no risk when it takes a failed bank over. I am sure these loss-share agreements will cost way more than the FDIC expects.
There is also the issue of the debt ceiling that we have to deal with as well. If we raise the debt ceiling we condemn our children and grandchildren to a life of indebtedness and if we do not we have to suffer the pain, I can handle the pain, can you? The economy is not getting better which also means another stimulus package is on its way as well, which is adding more debt to our problem. David Rosenberg it the nail on the head today when je said; “No one build more bridges, cemented more river beds, built more roads than Japan, but they could not break the deflationary spiral.” Bingo, we won’t break it that way either. In fact, the way we are going it will jump from inflation to rapid dollar devaluation, nice job Mr. Obama and Ms. Pelosi!
Here is the FDIC Document:
Sept 29 No 1
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