You can almost never go to a bank without seeing it. You can’t see a bank commercial without hearing it. “Insured by FDIC.”
The bailout bill that the Senate will vote on tonight is different than the one the House voted down two days ago. It raises the FDIC cap from $100,000 to $250,000, among other token measures.
I didn’t really start noticing the propoganda about the FDIC until I realized how worthless it was, after my own bank, Netbank, failed a year ago. The FDIC facilitated ING’s purchase of what was Netbank, which is the only thing of worth that they do.
They just can’t insure every American’s personal accounts up to $250,000. The fact that actual senators (or more likely, their staffs) have inserted this into a Congressional bill is perpetrating a fraud.
In isolated incidents such as that of Netbank, another bank will buy the failed bank’s holdings and make good on them, just like ING did. In a rash of closings like those we have seen, the government may “have” to do it because it’s not financially sound, but they won’t be able to. The FDIC was created to prevent runs on banks, and because some people trust the FDIC, it may in fact help prevent that.
However, if there is any type of massive failed bank situation where millions of Americans want the FDIC to pony up, it won’t be able to. It doesn’t have the funds, despite collecting premiums from banks all along. It doesn’t have $100,000 for every $100,000 customer, let alone $250,000. It has $50 billion ($8 billion of which went for IndyMac) to insure $1 trillion in deposits.
I am with Indy Mac FEDERAL Bank. I have been calling them every week for a month to see when they can help me with my mortgage. They gave me the # to the FDIC. I called them and they told me that all I could do to get help (since I’m current on payments) is to “WRITE YOUR CONGRESSMAN”!!!!! WTF?
DJK
October 10th, 2008
Yeah, people can criticize corporations until the cows come home, but I would prefer dealing with any corporation, even an evil one, over the government. You can sue a corporation, and you can switch to another one unless the government has given them a monopoly over something.
It’s much harder to sue your own government or switch to a competing one
libertariangirl
October 10th, 2008