| Author |
 Topic  |
|
|
horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 02/26/2008 : 08:16:01
|
The FDIC is beefing up for an expected surge in "business". This is mainstream news now, but hopefully not that surprising to a penny hoarder.
Advertisement: Coming soon to a town near you "Bank Run" a real life drama. Look for it at a location near you, but try to avoid getting cast as a part of the angry mob if you can avoid it...
Be sure to read this number very closely: "At the end of 2007, it had $52.4 billion". If you think this a big number, compare it to the $3 trillion in insured deposits kept at US banks. So $52.4 billion is enough to cover 1.75% of insured deposits.
The insurance only has enough to protect against regular average yearly bank failures. In the case of a nationwide event where say maybe 5%-10% of banks are getting taken out or even just one or two large banks, things can get really messy, really quick.
You must be logged in to see this link.
--------------- QUOTE ---------------
FDIC Readies for a
Rise in Bank Failures
By DAMIAN PALETTA
February 26, 2008
WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.
The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.
In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.
"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.
"The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.
On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area.
The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts. The FDIC is expected to update its data on "problem" institutions today.
Before the housing market soured, the banking industry was enjoying one of its most profitable stretches in U.S. history. There wasn't a single bank failure from July 2005 through January 2007, an unprecedented span.
There have only been four bank failures in the past 12 months, a rate the FDIC has easily been able to handle.
In many parts of the country, the housing-market decline has hamstrung banks, and regulators have reported weakening performance of commercial real estate, small business and credit-card loans. Exacerbating the situation is a cash-flow crunch, which makes it harder for banks to obtain funding to originate new loans.
FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich have warned of a pickup in bank failures. Last week, Mr. Reich reported that the thrift industry lost a record $5.2 billion in the fourth quarter.
The FDIC was created by Congress in the 1930s after a series of bank runs during the Great Depression. At the end of 2007, it had $52.4 billion in its fund that backstops the nation's insured deposits.
--------------- END QUOTE ---------------
|
Edited by - horgad on 02/26/2008 10:02:32 |
|
|
Crash
Penny Pincher Member
USA
155 Posts |
Posted - 02/26/2008 : 09:59:31
|
| This sounds pretty terrifying. I know I'm just rehashing the obvious, but if there are any major bank runs like there were in the Great Depression, people without any money on hand are going to be screwed. Not to mention, the FDIC seems like they don't have the people with the experience on hand to deal with that kind of situation. |
 |
|
|
pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
|
|
fiatboy
Administrator
912 Posts |
Posted - 02/27/2008 : 20:05:10
|
| Glad you posted this, horgad.....Looks like the writing is on the wall. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
|
|
| |
Topic |
|
|
|
FDIC Is Beefing Up
Forum Locked
