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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 09/30/2008 : 13:31:53
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FDIC says wants to raise deposit insurance limit-source
Tue Sep 30, 2008 1:51pm EDT Email | Print | Share| Reprints | Single Page | Recommend (0) [-] Text [+] Market News
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More Business & Investing News... WASHINGTON, Sept 30 (Reuters) - The chairman of the House Financial Services Committee has told lawmakers that a federal bank regulator will seek authority to increase the deposit insurance limit to a level above its current $100,000, said a source familiar with the chairman's thinking.
Representative Barney Frank, a Massachusetts Democrat, has told lawmakers of his committee that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, will soon request the authority to boost the level of insured deposits, the source said.
Presidential nominees Barack Obama and John McCain both proposed an increase in federal deposit insurance to $250,000 from $100,000 as a way to broaden support for the bank asset bailout bill rejected on Monday by the House of Representatives.
(Reporting by Patrick Rucker; Editing by Diane Craft)
© Thomson Reuters 2008 All rights reserved
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 09/30/2008 : 13:36:04
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| CNBC reports talk of the FDIC doing the bailout and by-passing congress. If Wall Street wants "their" money......... they get it. To hell with congress and the will of the people. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 09/30/2008 : 14:14:35
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| Just one more signal that everything is being done to try and ensure that this does not end in a deflationary depression, but rather an inflationary one. They will try to avoid the policy "mistakes" made during the Great Depression at any cost. So instead we will having something different, but equally bad or God forbid worse. Ben and friends are standing-by hitting the print money button as each new problem pops up. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/30/2008 : 16:20:10
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They raise the FDIC insurance limit
I lower my bank balance amount
Works for me.
Slightly off topic but worth asking-
Since Americans have one of the lowest rates of saving in the world, and since so few typical Americans have $100,000 in the bank, let alone above that, what good is raising the FDIC limit for the average saver? (Not to mention the effects of real world inflation on money that is saved.) |
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fb101
Administrator
USA
2856 Posts |
Posted - 09/30/2008 : 18:57:34
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| Mostly to benefit small businesses I think, although I know some older people who have >100K stashed in CD's for retirement income. Many small businesses need to have> 100K cash for flow, and maintaining several accounts a different banks invites IRS problems. Catch 22 to me.... |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 09/30/2008 : 21:50:09
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quote:
Originally posted by fb101
Mostly to benefit small businesses I think, although I know some older people who have >100K stashed in CD's for retirement income. Many small businesses need to have> 100K cash for flow, and maintaining several accounts a different banks invites IRS problems. Catch 22 to me....
Bingo! Small businesses are just about the only entities keeping >$100k in any sort of bank account. And if they flee the scene,...... lights out... |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 10/01/2008 : 15:30:12
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Exactly if large depositor pull funds then it hurts a lot worse than a bunch of small ones. The profit margin to the bank is higher for larger balances. That profit can be used to offset loan losses and help make banks more solvent. Not to mention the whole liquidity problem for the banks will be even worse. AKA run on the bank.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 10/01/2008 : 20:50:57
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As far as Taking the FDIC to $250,000. Let's be honest, the only real reason for this is unspoken i.e. so it would be less likely that there might be a run on the banks!
"In the chaos of the last few days, a lot of erroneous press reports are coming out about the FDIC and the deposit insurance fund. It is important for people to understand that the deposit insurance fund, like all federal trust funds, is simply an accounting entry with the US Treasury. There is no separate fund. The amount in the FDIC fund shows how much cash has been contributed by the banking industry to support the deposit fund. However, we need to make clear that the US Treasury will advance whatever cash is needed by FDIC to address bank failures and make good the deposit insurance guarantee. There is no issue regarding the bank insurance fund, but unfortunately most of the public do not understand this. The FDIC needs to make this clear in all of its public statements."
Source:
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The Senate passed the bill...again tonight! Let’s hope the House has more sense! It is not a 700 billion dollar bailout...they added another 150 billion to try to buy the vote from House members! |
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Ant
Penny Hoarding Member
USA
894 Posts |
Posted - 10/01/2008 : 21:28:18
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I can kind of see this both ways.
On one hand, $100,000 now is not what it used to be. 
On the other hand, some above posters are right, there are only two groups of depositors who have to worry about the $100,000 limit --
1. Small businesses, especially those which temporarily hold money for clients in escrow and trust accounts, such as real estate agencies and attorney's offices. For example, at my last job in a law practice, we had to split the clients' trust accounts into three different accounts to avoid accidentally going over the limit. Money is constantly moving in and out of those accounts and if something were to happen (as things seem to do these days) and a client lost money, it would be a nightmare. Attorneys are catch as catch can for a lot of things, but they don't fool around with the trust accounts. That's a good way to get disbarred and audited by the IRS.
2. Older peeps. As boomers age, they will invest more conservatively. Some of their money is going to go to CDs and money market accounts. Plus there are already folks like my grandparents, who haven't exceeded the FDIC limit on any accounts, but it's taken some shuffling. I don't like to think of anyone's older relatives accidentally getting burned. |
Lovely dimes, the liveliest coin, the one that really jingles. --Truman Capote
Coins are the metallic footprints of the history of nations. --William H. Woodin |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 10/01/2008 : 21:46:31
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quote:
Originally posted by Ant
I can kind of see this both ways.
On one hand, $100,000 now is not what it used to be.
On the other hand, some above posters are right, there are only two groups of depositors who have to worry about the $100,000 limit --
1. Small businesses, especially those which temporarily hold money for clients in escrow and trust accounts, such as real estate agencies and attorney's offices. For example, at my last job in a law practice, we had to split the clients' trust accounts into three different accounts to avoid accidentally going over the limit. Money is constantly moving in and out of those accounts and if something were to happen (as things seem to do these days) and a client lost money, it would be a nightmare. Attorneys are catch as catch can for a lot of things, but they don't fool around with the trust accounts. That's a good way to get disbarred and audited by the IRS.
2. Older peeps. As boomers age, they will invest more conservatively. Some of their money is going to go to CDs and money market accounts. Plus there are already folks like my grandparents, who haven't exceeded the FDIC limit on any accounts, but it's taken some shuffling. I don't like to think of anyone's older relatives accidentally getting burned.
You should have a long talk with Paul.... Many, and I'm guessing several hundred thousand small businesses have >$100k in checking accounts.
I work for a law firm too, but my family owns a lumberyard that employees 5 people, it is not at all unusual for them to have $100-200k in checking, as payables, receivables and payroll are all in the same account.
The very fact that they want to extend to FDIC coverage from $100k to $250k scares the living sh!t out of me. Congress DOESN'T KNOW WHAT TO DO.
Give Paul some carrots for me, would you, he makes me think of my uncle, who despite his politics is a pretty good guy. |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Edited by - Delawhere Jack on 10/01/2008 21:48:51 |
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Ant
Penny Hoarding Member
USA
894 Posts |
Posted - 10/01/2008 : 22:52:44
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quote:
Originally posted by Delawhere Jack
Give Paul some carrots for me, would you, he makes me think of my uncle, who despite his politics is a pretty good guy.
You are so sweet to post that, thank you. I'm sorry to say that we lost Paul to colic the July before last (2007). Obstruction or tear in the front part of his small intestine. We don't know if it was a congenital problem (like a small tear there from birth) or if the intestine was misshapen from years of carrying a worm burden (he was not in the best of health when we got him).
But I do believe that Paul is standing in green grass right now, where the sun is warm and bright, where all the mules and horses go. I think he is also having carrots and his favorite, hot bran mash with apples. (Sorry, aagh, all teared up now, Paul was everybody's favorite.) |
Lovely dimes, the liveliest coin, the one that really jingles. --Truman Capote
Coins are the metallic footprints of the history of nations. --William H. Woodin |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 10/02/2008 : 07:38:35
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The FDIC will run out of money soon. So this will be another source of printing. What is important here is not that the limit is 100K or 250K, but that by raising the limit when they know they are going to run out of reserves they are saying that money is not an issue.
The whole idea of the limit in the first place was to try and actually make the insurance "real". In other words, to have the insurance keep enough reserves to cover a normal number of banks going under with a normal number of depositors be refunded. The limit encouraged rich depositors not to just use one bank. This was to help prevent the FDIC from taking too big of a hit from on bank going under.
Well at this point just throw the whole insurance company idea out the window. The FDIC is now just one of many printing presses standing by waiting to print. Reserves do not matter, number of insured does not matter, amount insured does not matter, number of failed banks does not matter, the FDIC will not go under.
Imagine your insurance company raising your coverage for free because too many houses are burning down and the fire is moving towards you.  |
Edited by - horgad on 10/02/2008 07:41:17 |
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Ant
Penny Hoarding Member
USA
894 Posts |
Posted - 10/02/2008 : 08:06:55
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quote:
Originally posted by horgad
The whole idea of the limit in the first place was to try and actually make the insurance "real". In other words, to have the insurance keep enough reserves to cover a normal number of banks going under with a normal number of depositors be refunded. The limit encouraged rich depositors not to just use one bank. This was to help prevent the FDIC from taking too big of a hit from on bank going under.
Never thought of that before, but it makes perfect sense. Unfortunately. |
Lovely dimes, the liveliest coin, the one that really jingles. --Truman Capote
Coins are the metallic footprints of the history of nations. --William H. Woodin |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 10/02/2008 : 09:41:35
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Yea I think the Fed printing press is pretty much turned way on. They have increased their balance sheet through the roof. They aren't doing it by buying treasuries though. I wonder if they will end up owning Treasuries to replace the bank reserves? Their increase leverage hasn't been inflationary (yet). So many we can print a lot of the national debt to replace lost banking leverage. That would be good for tax payers if they can print say a trillion dollars without it being inflationary. If they can also make a profit or break even from the bailout plan, then the government's balance sheet could look pretty good in 5-10 years.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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kieblera5
Penny Hoarding Member
USA
859 Posts |
Posted - 10/02/2008 : 13:42:06
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| The bill will pass... Of that I am 90% sure. The revised bill just has too much juicy succulent pork for the House to pass up. On topic, the bill states that it will increase the federal insurance for bank deposits from 100k to 250k, but only temporarily. Does anyone know how long "temporarily" is? My guess is that it won't really matter. Even with the extra insurance, people will still pull out. It is bound to happen, the question is when? |
Democracy is being allowed to vote for the candidate you dislike least.
Never argue with an idiot. They will drag you down to their level and then beat you mercilessly with experience.
Caller number seven gets the Peace Prize!
Get coding tips, tricks, and more at: http://codingmonday.blogspot.com |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 10/02/2008 : 17:13:46
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quote:
Originally posted by Ant
quote:
Originally posted by Delawhere Jack
Give Paul some carrots for me, would you, he makes me think of my uncle, who despite his politics is a pretty good guy.
You are so sweet to post that, thank you. I'm sorry to say that we lost Paul to colic the July before last (2007). Obstruction or tear in the front part of his small intestine. We don't know if it was a congenital problem (like a small tear there from birth) or if the intestine was misshapen from years of carrying a worm burden (he was not in the best of health when we got him).
But I do believe that Paul is standing in green grass right now, where the sun is warm and bright, where all the mules and horses go. I think he is also having carrots and his favorite, hot bran mash with apples. (Sorry, aagh, all teared up now, Paul was everybody's favorite.)
I'm sorry to here that, but I'm sure he's in a good place now.
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 10/02/2008 : 17:18:46
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You must be logged in to see this link.
The Federal Reserve has turned on the printing presses my friends. Look at the growth since 10/3/07.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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kieblera5
Penny Hoarding Member
USA
859 Posts |
Posted - 10/02/2008 : 18:03:59
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quote:
Originally posted by swusc
You must be logged in to see this link.
The Federal Reserve has turned on the printing presses my friends. Look at the growth since 10/3/07.
-SWUSC
Amazing... Maybe that web bot project is right about 10/7? I guess we will find out in a couple of days. |
Democracy is being allowed to vote for the candidate you dislike least.
Never argue with an idiot. They will drag you down to their level and then beat you mercilessly with experience.
Caller number seven gets the Peace Prize!
Get coding tips, tricks, and more at: http://codingmonday.blogspot.com |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 10/02/2008 : 18:25:02
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quote:
Originally posted by horgad
The FDIC will run out of money soon. So this will be another source of printing. What is important here is not that the limit is 100K or 250K, but that by raising the limit when they know they are going to run out of reserves they are saying that money is not an issue.
The whole idea of the limit in the first place was to try and actually make the insurance "real". In other words, to have the insurance keep enough reserves to cover a normal number of banks going under with a normal number of depositors be refunded. The limit encouraged rich depositors not to just use one bank. This was to help prevent the FDIC from taking too big of a hit from on bank going under.
Well at this point just throw the whole insurance company idea out the window. The FDIC is now just one of many printing presses standing by waiting to print. Reserves do not matter, number of insured does not matter, amount insured does not matter, number of failed banks does not matter, the FDIC will not go under.
Imagine your insurance company raising your coverage for free because too many houses are burning down and the fire is moving towards you.
Master, your wisdom is profound. 
Wonder if it's too late to buy stock in the printing press manufacturers?
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/02/2008 : 19:32:36
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A little off topic-
The government stopped printing the $500 bill, the $1,000 bill and the $10,000 bill back n 1969.
Think they will make a comeback?
(There was such a thing as a $100,000 bill, but these were not allowed to circulate, they were only for Federal Reserve Banks to hold as reserves, this was long before digital bookkeeping existed.)
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 10/02/2008 : 19:38:31
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quote:
Originally posted by pencilvanian
A little off topic-
The government stopped printing the $500 bill, the $1,000 bill and the $10,000 bill back n 1969.
Think they will make a comeback?
(There was such a thing as a $100,000 bill, but these were not allowed to circulate, they were only for Federal Reserve Banks to hold as reserves, this was long before digital bookkeeping existed.)
I doubt it. There isn't enough purchases that would reach the $500+ price range. Most people likely use digital payments for super large purchases.
Yet, the funny thing is that the dollar is very strong into this mess, and other central banks are wanting to swap their currency for USD. There is big demand for dollars due to the deleveraging. I bet the deleveraging start to pull CPI/Inflation down as well. Look at new car sales in Sept. They are tanking worse than the stock market!!
Gas futures have dropped to $2.25 a gallon. That is a huge drop for average joe.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 10/02/2008 : 19:43:22
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quote:
Originally posted by pencilvanian
A little off topic-
The government stopped printing the $500 bill, the $1,000 bill and the $10,000 bill back n 1969.
Think they will make a comeback?
(There was such a thing as a $100,000 bill, but these were not allowed to circulate, they were only for Federal Reserve Banks to hold as reserves, this was long before digital bookkeeping existed.)
I was just thinking about that today. Why not just come out with $250,000 bills and make it easy on the tellers during the coming bank crashes? |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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kieblera5
Penny Hoarding Member
USA
859 Posts |
Posted - 10/02/2008 : 19:57:42
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quote:
Originally posted by swusc
quote:
Originally posted by pencilvanian
A little off topic-
The government stopped printing the $500 bill, the $1,000 bill and the $10,000 bill back n 1969.
Think they will make a comeback?
(There was such a thing as a $100,000 bill, but these were not allowed to circulate, they were only for Federal Reserve Banks to hold as reserves, this was long before digital bookkeeping existed.)
I doubt it. There isn't enough purchases that would reach the $500+ price range. Most people likely use digital payments for super large purchases.
Yet, the funny thing is that the dollar is very strong into this mess, and other central banks are wanting to swap their currency for USD. There is big demand for dollars due to the deleveraging. I bet the deleveraging start to pull CPI/Inflation down as well. Look at new car sales in Sept. They are tanking worse than the stock market!!
Gas futures have dropped to $2.25 a gallon. That is a huge drop for average joe.
-SWUSC
I think that people will use electronic payment for everything in the near future. Its funny, paper is virtually worthless, only use is for heating the home. However, plastic is even worse. The dollar's value will be zero eventually, whether you are holding it in your hand or you are virtually "guaranteed" it. |
Democracy is being allowed to vote for the candidate you dislike least.
Never argue with an idiot. They will drag you down to their level and then beat you mercilessly with experience.
Caller number seven gets the Peace Prize!
Get coding tips, tricks, and more at: http://codingmonday.blogspot.com |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 10/02/2008 : 20:38:10
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The dollar doesn't get its value from what it is made of. It gets its value from demand for it.
People must have dollars to pay taxes, pay bills, pay their debts and so on. If someone owes a bank $200,000, then they have to come up with $200,000 at some point. They have to provide services or goods to obtain those dollars.
If we have to many dollars floating around, then their value drops (exchange rates or inflation). If we have to few dollars floating around, then their value increases. It is simple supply and demand.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 10/02/2008 : 22:11:24
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quote:
[i]
If we have to few dollars floating around, then their value increases. It is simple supply and demand.
-SWUSC
True, but with the "supply of dollars" shrinking due to fictictious dollars (aka, the bubble(s), take your pick which ones) dissapearing, it unmasks the lie of the dollar which the whole scheme is built on.
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 10/03/2008 : 00:44:33
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Good thing I have a Glory currency counter for when these are like Zimbabwe dollars. 
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If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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FDIC wants to raise deposit insurance limit
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