The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006….
Congress believed that the fund was so well-capitalized – and that bank failures were so infrequent – that there was no need to collect the premiums for a decade, according to banking officials and analysts.
Irenaeus commented about this the other day on one of Kendall’s earlier posts.
Were there any articles about this in the media between 1996 and 2006? It seems hard to characterize this as anything other than freebie insurance for big banks. If any newspaper/network wanted to illustrate evil ties between business and government, here you go.
I suppose corruption in deposit insurance isn’t sexy enough for the evening news.
Unbelievable. No, actually, all too believable.
[i] It seems hard to characterize this as anything other than freebie insurance for big banks [/i]
The zero-premium rule provided free insurance to all banks, large and small.
Reserve judgment on small banks’ protestations of innocence. Their trade associations did plenty to support bad policies, including the zero-premium giveaway. We don’t know how many small banks will fail or how costly those failures will be.
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For those who may be interested, here are my [url=http://new.kendallharmon.net/wp-content/uploads/index.php/t19/article/20886/#342719]earlier explanations[/url] of [url=http://new.kendallharmon.net/wp-content/uploads/index.php/t19/article/20886/#342844]the Great Decade-Long Deposit Insurance Giveaway[/url].