Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.
The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures.
Why the kabuki theater on all this? Why did FDIC Chairman Sheila Bair go public with the “fear” that the FDIC would run out of money, when the arrangements could have been made quietly with Dodd et al and no public anxiety ensue? Is it stupidity or stagecraft? If the latter…to what end?
Sorry for the back to back posts…
[blockquote]“The FDIC realizes that these assessments are a significant expense, particularly during a financial crisis and recession when bank earnings are under pressure,†Bair wrote. “We did not want to impose large assessments when the industry and economy are struggling. We searched for alternatives but found none better.†[/blockquote]
Sounds like someone put on her thinking cap and did come up with a “better” alternative! The first plan would have banks that did nothing wrong “paying for the incompetence and greed of Wall Street” (Camden Fine, president of the Independent Community Bankers of America).
On March 4th, “Bair rejected arguments that the agency should use government aid to rebuild the fund.” The FDIC already has authority to use a $30 billion line of credit at the Treasury Department, The pending legislation was going to increase that to $100 billion. Now, suddenly, it’s FIVE times as much! The taxpayers are on the hook again!
IDIOTS!!!