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keys
Penny Collector Member
383 Posts |
 Posted - 03/07/2009 : 13:57:40
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Washington plans for big bank failure
A bill introduced in the Senate would give FDIC chief, Sheila Bair, a huge loan to handle 'emergency situations' in the banking sector.
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Colin Barr, senior writer
Last Updated: March 7, 2009: 7:44 AM ET
EXCERPTS-
NEW YORK (Fortune) -- The government is bracing for a big bank failure.
A bill introduced in Congress would give the FDIC, the agency that stands behind Americans' bank deposits, temporary authority to borrow as much as $500 billion from the government to shore up the deposit insurance fund.
The bill -- the Depositor Protection Act of 2009, backed by Senate Banking Committee Chairman Chris Dodd, D-Conn. and Sen. Mike Crapo, R-Idaho -- wouldn't change the status of individual bank accounts, which through the end of this year are insured up to $250,000.
....Dodd said he introduced the legislation at the behest of other regulators, notably Federal Deposit Insurance Corp. chief Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner. All three recently wrote Dodd to support an emergency expansion of the FDIC's capacity to borrow from the Treasury.
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Fear of a big collapse continues to rise
The Credit Derivatives Research counterparty risk index -- a measure of the annual cost of insuring the bonds of 14 global financial companies against default -- surged nearly 30% this week as investors rushed to protect themselves against possible defaults at giant institutions.
It now costs an average of $289,000 per year to buy insurance on $10 million's worth of bank debt, according to the CDR index. That's just shy of the $300,000 average premium in force the day the index hit its all time high -- Sept. 17, 2008.
That was the day after the government's $85 billion first bailout of AIG (AIG, Fortune 500), two days after the failure of broker-dealer Lehman Brothers and a week before WaMu was seized by regulators.
The current degree of stress in the financial sector is "totally shocking," said Johnson, given the massive resources governments around the globe have devoted to reducing fears of a major collapse.
($500 billion borrowed... a few billion here, a few billion there, pretty soon we're talking real money )
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I change with the times-
but like silver coins found in your change
I stay the same.
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The United States of America started out as the new Republic of Rome.
Will The United States of America end up as the New Imperial Rome? |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 03/07/2009 : 16:01:42
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I saw that yesterday, different source, Bloomberg I think. It was all I could do not to soil my drawers. 
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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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The overnment is Bracing for a Big Bank Failure.
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