Nine banks with a total of 153 offices were seized last evening, opening today as branches of the appropriately named U.S. Bank.
“The FDIC and U.S. Bank entered into a loss-share transaction on approximately $14.4 billion of the combined purchased assets of $18.2 billion. U.S. Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector.”
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I thought the FDIC was running out of money? (http://finance.yahoo.com/news/FDIC-weighs-extraordinary-apf-3266069115.html?x=0) It looks like the cartel is getting smaller in number and bigger is the size of its remaining members.
Not quite sure how the loss-sharing arrangement works. It appears to me that the FDIC isn’t directly taking over banks…just acting as the match maker. I quit trying to make sense of the banking industry after I learned of fractional reserve banking. They can make the rules as they go obviously so there is no point in trying to keep up with them…they will do whatever it takes to keep the system going. So it really doesn’t matter if the fdic is broke.
Sheila Bair, chair of the FDIC, is coming to speak at my school, Kansas State, tomorrow. I might have to ask her about this.
http://moneyandethics.blogspot.com/
Sunday, November 1, 2009
Will The FDIC Put Out The Fires Using Gasoline?
Let’s cut out the middleman – the FDIC! The main reason is to make it very evident that the money going to the banks that do not have the reserves required to meet their obligations (bankrupt!) is really just being printed out of thin air.
With the FDIC serving as a vehicle for the transfer of new counterfeit money to those banks who had scandalous practices it is less obvious to everyone where the money comes from and how it is directly just a product of counterfeiting.
This is another example of the lack of transparency. The FDIC reserves and the boosting of their reserves mostly come from the sleight of hand. Remove the mirrors and all of the sudden the status of the FDIC will be a subject of much discussion and discontent.
Saying that banks are being ‘saved’ by the FDIC is like saying that an arsonist is doing his civic duty by calling the fire department to report the fire, and then the fire department asks the arsonist to watch and fill in an evaluation form!
Yep FDIC insurance being paid out is inflationary in the sense of preventing even more fractional reserve deflation (even if the FDIC is paying out of collected and saved insurance fees). However, as Bruce points out once they run out they will need to “print” new money which will cause fiat monetary inflation, and increase in base money supply.
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