Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.
The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.
The borrowed money would be repaid once the assets of that failed bank are sold.
"I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses," Chairman Sheila Bair said in an interview with the paper.
Bair said such a scenario was unlikely in the "near term." With a rise in the number of troubled banks, the FDIC's Deposit Insurance Fund used to repay insured deposits at failed banks has been drained.
In a bid to replenish the $45.2 billion fund, Bair had said on Tuesday that the FDIC will consider a plan in October to raise the premium rates banks pay into the fund, a move that will further squeeze the industry.
The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other U.S. banks, Bair said.
The last time the FDIC had borrowed funds from the Treasury was at nearly the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered.
The fact that the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis, the Journal said. Don't Panic.
P=fl² P - Peace; f - Freedom; l - Love
Anonymous Coward User ID: 435070 8/27/2008 1:46 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Saving & Loan crisis, now what does that remind me off......it has five in it.....yep.... and somethang to do with this election...or someone in it.........right.....help me out here..... __O__/
#
_/_\_____
"
Outside OUTSIDE ......Surf it now.....
Anonymous Coward User ID: 434204 8/27/2008 2:17 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Saving & Loan crisis, now what does that remind me off......it has five in it.....yep.... and somethang to do with this election...or someone in it.........right.....help me out here.....
Quoting: Enlilson
Rhymes with eating?
Anonymous Coward User ID: 461373 8/27/2008 2:21 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Gerald Celente was saying on C2C that the 40 billion was
'ONLY 2% OF WHAT THE FDIC WAS GOING TO NEED'.
He is predicting massive rioting through out the US
in 09 when the next major wave of forclosures swamps
the banks and when commercial real estate takes it turn,
LOOK OUT!!!
Anonymous Coward User ID: 10627 8/27/2008 2:22 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Saving & Loan crisis, now what does that remind me off......it has five in it.....yep.... and somethang to do with this election...or someone in it.........right.....help me out here.....
Quoting: Enlilson
The great republican ronnie regan,saving and loan scandal,180 billion cost to the tax payers.McCain was caught in the middle ,one of the Charles Keating "5".Keating gave john 120,000 and cindy 420,000 US American dollars.These are Great Americans,they love America,Money for nothing ,chicks for free,,,,,,,,,
CountryJoe down a long dirt road is my domain User ID: 487196 8/27/2008 2:53 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
we call it "robbing Peter to pay Paul" here in the country.. Each of us-
A cell of awareness-
Imperfect and incomplete.
Genetic blends
With uncertain ends
On a fortune hunt that's far too fleet.
IM @ AIM: country12965
Yahoo: JoeSicspak
CountryJoe down a long dirt road is my domain User ID: 487196 8/27/2008 2:55 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Saving & Loan crisis, now what does that remind me off......it has five in it.....yep.... and somethang to do with this election...or someone in it.........right.....help me out here.....
Quoting: Enlilson
yep..the bushies were in on that great robbery too.. Each of us-
A cell of awareness-
Imperfect and incomplete.
Genetic blends
With uncertain ends
On a fortune hunt that's far too fleet.
IM @ AIM: country12965
Yahoo: JoeSicspak
Anonymous Coward User ID: 491980 8/27/2008 3:06 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Here is a really good and easy to understand article regarding all this:
[link to www.newsvine.com]
Pretty much confirming more banks to go down.
Quoting: Anonymous Coward 491033
from the article I've linked:
"The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003. (The agency doesn't disclose the names of institutions on its internal list of troubled banks; doing so would like spark a run on deposits. On average, 13 percent of banks that make the list fail.)"
"Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out." (President Andrew Jackson 1832)
Anonymous Coward User ID: 491033 8/27/2008 3:11 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Here is a really good and easy to understand article regarding all this:
[link to www.newsvine.com]
Pretty much confirming more banks to go down.
from the article I've linked:
"The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003. (The agency doesn't disclose the names of institutions on its internal list of troubled banks; doing so would like spark a run on deposits. On average, 13 percent of banks that make the list fail.)"
Quoting: Anonymous Coward 491033
..."doing so would like spark a run on deposits."
LIKE, FOR SURE, DUDE!
Anonymous Coward User ID: 490243 8/27/2008 3:39 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Gerald Celente was saying on C2C that the 40 billion was
'ONLY 2% OF WHAT THE FDIC WAS GOING TO NEED'.
He is predicting massive rioting through out the US
in 09 when the next major wave of forclosures swamps
the banks and when commercial real estate takes it turn,
LOOK OUT!!!
Quoting: Anonymous Coward 461373
The fed just prints it up. Nothing to see here. Move along.
Anonymous Coward User ID: 490243 8/27/2008 3:40 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Here is a really good and easy to understand article regarding all this:
[link to www.newsvine.com]
Pretty much confirming more banks to go down.
from the article I've linked:
"The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003. (The agency doesn't disclose the names of institutions on its internal list of troubled banks; doing so would like spark a run on deposits. On average, 13 percent of banks that make the list fail.)"
..."doing so would like spark a run on deposits."
LIKE, FOR SURE, DUDE!
Quoting: Anonymous Coward 491033
There is no shortage of cash. All they do is print more. It's not like it was based on gold, or anything of value. The only limit is the paper supply or computer memory.
Gerald Celente was saying on C2C that the 40 billion was
'ONLY 2% OF WHAT THE FDIC WAS GOING TO NEED'.
He is predicting massive rioting through out the US
in 09 when the next major wave of forclosures swamps
the banks and when commercial real estate takes it turn,
LOOK OUT!!!
The fed just prints it up. Nothing to see here. Move along.
Quoting: Anonymous Coward 490243
You don't understand how this works do you.
Your paper will be worthless, there will be no markets
and basic necessities will be unattainable;
hence the rioting and all the wonderful 'controls'
that will come as a result.
This will be the end of America as most people know it.
:laughs:when you borrow money they tack on interest,so what's the point in borrowing money when they tack on interest more like "would you like to collpase now or later?"
Anonymous Coward User ID: 491394 8/27/2008 4:17 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Get you fingers out of you mouth and on the keyboard and give us the list of the 117 banks. Who cares about the noise, give us the darn list!!!! Typical.
Anonymous Coward User ID: 488338 8/27/2008 5:28 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Get you fingers out of you mouth and on the keyboard and give us the list of the 117 banks. Who cares about the noise, give us the darn list!!!! Typical.
Quoting: lamchop
So whats typical your hypocrisy? All you have to do is a typical google search. I just did one and came up with over 600,000 entries on failing banks in the US. For the people that dont think of this as a big deal, well as they say ignorance is bliss.
Anonymous Coward User ID: 482097 8/27/2008 5:32 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Get you fingers out of you mouth and on the keyboard and give us the list of the 117 banks. Who cares about the noise, give us the darn list!!!! Typical.
Quoting: lamchop
I believe 13% of 117 banks is about 15 banks guaranteed to fail...
Anonymous Coward User ID: 476198 8/27/2008 6:08 PM
Re: UH OH: FDIC may borrow money from Treasury to see it through an expected wave of bank failures: report
Saving & Loan crisis, now what does that remind me off......it has five in it.....yep.... and somethang to do with this election...or someone in it.........right.....help me out here.....
yep..the bushies were in on that great robbery too..
Quoting: CountryJoe
How come every time a republican is in the white house someone rips the tax payers off for a couple hundred billion dollars,,,not a word said.A Democrat get a little head and they screach and moan for years about that.I guess they are used to Grand Larceny,stealing and such,but they never have straight sex......
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The great republican ronnie regan,saving and loan scandal,180 billion cost to the tax payers.McCain was caught in the middle ,one of the Charles Keating "5".Keating gave john 120,000 and cindy 420,000 US American dollars.These are Great Americans,they love America,Money for nothing ,chicks for free,,,,,,,,, 
