Processing Deposit Accounts in a Bank Failure

[Ernest]

Processing Deposit Accounts in a Bank Failure;
Modernizing Large-Bank Insurance Determinations
Notice of Proposed Rulemaking FIL-2-2008
January 14, 2008


Summary: The FDIC is proposing the attached two-part rulemaking relating to the potential failure of an FDIC-insured depository institution: The first part of the proposal would govern how and at what point deposit account balances would be determined in the event of a failure, and applies to all FDIC- insured depository institutions. The second part proposes requirements to facilitate the process for determining the insurance status of depositors of large insured depository institutions in the event of failure. Comments on the Notice of Proposed Rulemaking are due by April 14, 2008.

http://www.fdic.gov/news/news/financial/2008/fil08002.html#body

 

[kyleAF]

WTF?

They're updating contingencies??...

Of course, the FDIC should be losing its AAA status just like Ambac, MBIA, etc. They're broke, and operating solely on defaulting credit.

The only way to insure our money during the collapse of a fractional reserve system is to make more of it out of thin air. With the fraction being as high as 9 to 1 though, that's A LOT of additional dollars. Inflation...

 

[Eponym_mi]

The timing of this is disconcerting.

 

[2orb]

The only way to insure our money during the collapse of a fractional reserve system is to make more of it out of thin air.

Yes. As I see it we the taxpayers are ultimatley the FDIC.

 

[jonahtrainer]

Yes. As I see it we the taxpayers are ultimatley the FDIC.

Actually, the taxpayers and depositors will.

For example, I heard but have not verified the exact ##s that there are about $50B of reserves for about $4.2T of deposits. All the FDIC has to return is 'notional' amounts of FRNs. They do not have to return 'purchasing power.' Consequently, 50B/4.2T=1.2% of purchasing power is about all you'll get .... if that.

 

[AceNZ]

The FDIC is a sham. It's just a shell that gives the public the illusion that banks are offering "deposit insurance". Instead, the FDIC is a gateway to government-provided funds and other bailout mechanisms.

Look at Continental Illinois Bank in 1984. I think it was the country's 7th largest bank at the time. Deemed "too big to fail", it was basically nationalized by the FDIC. Over 90% of their deposits were above the $100K limit, but rather than defaulting on those deposits, the decision was made to save everyone's deposits -- of course at taxpayer expense, since the FDIC picked up most of the bank's bad loans as part of the nationalization process.