Ryan McMaken Archive
It's good to be the FDIC
A few days ago, I pointed out that the FDIC is quickly going broke, and that the size of the hits to the FDIC's insurance fund keep getting larger.
Today, The FDIC announced that banks will need to hand over $45 billion to the FDIC in the form of a "prepayment" of their deposit insurance premiums for the next three years.
Says the FDIC:
"The staff of the Federal Deposit Insurance Corp. said it expects expenses tied to failed banks to surge to $100 billion over five years -- up 43% from the agency's last estimate in May."
Notably, the headline reads that the FDIC "asks banks for help." How polite of them. What happens if a bank refuses to "help?"
It's Friday, which means another bank closure
Regulators like to raid and close banks on Friday afternoons, so today, they closed down Atlanta-based Georgian Bank, making it the 95th bank closure this year.
The failure of this bank will cost the FDIC $892 million, which is quite a lot since the agency's deposit insurance fund was down to 10.4 billion as of June 30th. Since then, 50 more banks have been closed. It won't take many more failures like Georgian for the FDIC to end up completely out of money. Of course, they can tap the Treasury's line of credit to make up for the shortfall, which sounds dangerously close to being something like a bailout.
When it was closed two weeks ago, Corus Bank of Chicago cost the FDIC $1.7 billion. Corus had assets of $7 billion.
Back when it was closed in April, New Frontier Bank of Greeley, Colorado was noted as the largest failure of the year, with assets of $2 billion. It cost the FDIC $670 million. New Frontier has since been left in the dust by the parade of recent closings like Corus and the Irwin Union banks that were closed last week and cost the FDIC $850 million.
The latest panic over Chinese goods
MSNBC is helping stoke the flames of the latest anti-China hysteria over the safety of goods made in China. Remember the panic over toys painted with lead paint that were coming out of China? Children were supposed to be turning up retarded all over the American countryside thanks to those diabolical Chinese and their lead paint. Yet, somehow America survived that sinister attack.
Now, it's the Chinese and their tires that will be the death of us. This likely wouldn't even be a media issue if it weren't for the Obama administration's effort to re-create the glories of Hawley-Smoot by raising tarriffs on Chinese tires while undoubtedly feeling around for other tarriffs to raise as well.
I'm curious however, as to who is working behind the scenes to make the safety of Chinese tires an issue. The article begins with a reference to the United Steelworkers Union, which has likely been raising little passive-aggressive questions about the safety of Chinese tires while accusing the Chinese of "unfair" trade practices.
Americans need free trade now more than ever. Yes, consumers buy tires, but the biggest benefits will come from inexpensive tires purchased by producers who rely on fleets of trucks, tractors, or other kinds of capital that rely on cost-effective tires. Low cost tires mean lower cost goods for the rest of us.
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