FDIC May Need $150 Billion Bailout as More Banks Fail

Sept. 25 (Bloomberg) -- Deborah Horn tugs on the handle of the glass-paned entrance of the IndyMac Bancorp Inc. branch in Manhattan Beach, California. The door won't budge. The weekend is approaching, and Horn, 44, the sole breadwinner in a family of three, needs cash.

A small notice taped to the window on this Friday afternoon in mid-July tells her why she's been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp.

``The Receiver is now taking possession of the Bank,'' the sign says.

``I'm physically shaking,'' says Horn, an academic tutor, as she peers into the bank. Inside, an FDIC examiner is talking to six stone-faced IndyMac employees. ``I don't know when I'm going to be able to get my money,'' Horn says. ``I'm a single mom. This is the money I live on.''

Don't worry about Horn. She'll be all right, as will most of Pasadena, California-based IndyMac's 200,000-plus customers.

That's because the FDIC, created in 1934, insures all accounts up to $100,000 at its member banks, and it has never failed to honor a claim. The people to worry about are U.S. taxpayers.

Source



[edit on 27-8-2009 by phi1618]

Just what we need more bailouts, as if the last round of bailouts wasn't effective enough.....now the FDIC? ugh

nope we arent heading towards crisis...we are making a steady recovery..yeah right. The system is falling apart all around us.

Good find! S+F.

In the video he states that 25 banks failed last year and 16 have failed so far this year.

I counted 81, yes 81 bank failures so far this year.

FDIC Failed Bank List

Banks must pay special fee by September 30

To prepare for further bank collapses, a key regulator on Friday is expected to approve slapping on banks a one-time fee amounting to billions of dollars to help refill a depleted insurance fund used to protect depositors.

Source

Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures

The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said.

Source

Doing the math (Surely some bank failures cost more then other but for arguments sake I'm going to average them.)

If 25 bank failures last year cost roughly $15.7 billion that equals on average $628 million per bank failure.

81 bank failures this year @ an average of $628 million a pop equals over $50 billion.

If they bring in an extra $27 billion from fees that would put the fund at around $45 billion.

Shouldn't the FDIC already be insolvent or very close too it? Seems that a bank holiday might not be so far fetched.

To bad the FDIC doesn't make it's troubled bank list public.

[edit on 27-8-2009 by lucentenigma]

reply to post by lucentenigma


thanks for the great add the FDIC was a key reason why i chose the bank i currently use, it pretty much ensures me money.

With them failing, why put money in the bank if you can lose it? i can keep much better track of my mattress and ive never lost it.

reply to post by phi1618


Thanks for the info, Phi. That video was a little obnoxious at first, but seemed to explain things pretty well once you get past the beginning.

I'm just a little confused about the date listed on the article...

I've got this crazy feeling that FDIC is already broke, and they just aren't really telling us. I think they want to avoid a run on the banks. I'm convinced they are just going to pump more magical dollars into it from the magical dollar hole and keep lying about how swell things are going.

We are so screwed.

reply to post by KSPigpen


I would imagine so, you are probably right there Pigpen, the bottom line i feel is that our personal financial security is no guaranteed anymore. IM sure they saw this coming and even prepared to break the news, im sure it wasnt an out of the blue " hey we are broke!"

Another fine example of our ####ed up Govt. and banking system

#### the working people, bail out the ###holes

where's our bailout.........it's our money

This coming Monday, if we make it that far, let's all withdraw our cash (what's left)

How much more can one take

Keep an eye out for bank failures tomorrow (they are announced on Friday's).

It also seems that there are more failures the last Friday of the month also.

Edit to add:

Today's News:

FDIC: Troubled-banks list grows

Thursday, August 27, 2009, 12:04pm EDT
The number of troubled U.S. banks at the end of the second quarter reached the highest mark in 15 years, the Federal Deposit Insurance Corp. said Thursday. The list at the end of June totaled 416, up from 305 at the end of March. In June 1994, the FDIC listed 434 unnamed banks as troubled.

This information is old (1/1/2009). It's an unofficial troubled bank list, it has 243 banks listed and by the FDIC admission there are 416 on there list.

Unoffical Troubled Bank List

[edit on 27-8-2009 by lucentenigma]

reply to post by huntergatherer


I wish thye sent me a nice 150 Billion dollar bailout check or even a couple million would be nice but hey we cant have everyone be millionaires or else the price of goods would go up

3,000 $ ipods?

reply to post by lucentenigma


thanks for the insight, i will keep my eye on the status of my bank, hopefully it doesnt fail tomorrow.

Isn't this an old article?

The date says September 25. Today is August 27. The article is from 2008.

reply to post by phi1618


Here is a link to the full report. It is a stunner.
FDIC Q2 2009

Please note that they are listing around 10 billion in the fund (and have access to tap another $500 billion)

However, they are suggesting that that $10.368 billion is covering over 4,817,712 billion (ok 4 trillion) in deposits. But wait it gets better. That 4 trillion is based on insuring only $100k and not the $250k they shifted to.

Reads like this:

** The Emergency Economic Stabilization Act of 2008 directs the FDIC not to consider the temporary coverage increase to $250,000 in setting assessments. Therefore, we do not include the additional insured deposits in calculating the fund reserve
ratio, which guides our assessment planning, from fourth quarter 2008 through the second quarter of 2009. The Helping Families Save Their Home Act of 2009 eliminated the prohibition against the FDIC's taking the temporary increase into account
when setting assessments. Beginning in the third quarter of 2009 estimates of insured deposits will included the temporary coverage increase to $250,000.

So that 4 trillion they are insuring with 10 billion is really over 12 trillion.
It starts with this line, "More Than One in Four Institutions Are Unprofitable"

With 150 expected bank failures before the end of the year it is going to get very very ugly.

[edit on 28-8-2009 by Absum!]