FDIC . . . For Doing It Correctly
By Larry Doyle on March 20, 2009 at 7:45 AM in American Consumers, Banking Institutions, Commerce, Current Affairs, Economy, Education, Mortgages, Real Estate, Sense on Cents (Larry Doyle blog)
Sense on Cents is very judicious in selecting our Economic All-Stars (highlighted in the left sidebar of Sense on Cents). These individuals continually display a level of professionalism, maturity, consistency, and integrity which are not commonly found in our financial or political spectrum. I deeply appreciate their insights and perspectives and enjoy sharing them with our audience at Sense on Cents and No Quarter USA.
I thank Susan and Andy for tipping me off to remarks made earlier today in which Sheila Bair Says “Too Big to Fail” Strategy for Financial Institutions Must End. The administration and other political pundits are trying to make the case that the Federal Reserve should serve as the systemic risk regulator. In my opinion, Sheila Bair should occupy that role. There is a major political battle developing over this turf. Make no mistake that how this battle plays out will have deep and longstanding implications for our financial system as a whole and for individual consumers.
My vote goes to Ms. Bair and the FDIC, “for doing it correctly” to this point. The U.S. Systemic Risk Watchdog Not Panacea highlights the developing battle between the FDIC and the Fed. Both of these entities have a lot on their plate already, but I believe the FDIC is better positioned to handle this role. Bair and team are laser focused on banking institutions, while the Fed is more broadly focused on the economy, money supply, and the markets.
In recent discussions with a number of colleagues, the topic of the dramatically changing landscape in the world of banking keeps coming up. For many individuals, banks and banking operations can generate a fair amount of anxiety. In the process of praising Ms. Bair, I would like to use that as an opportunity to personalize the world of banking highlighted at the FDIC website.
This site addresses Deposit Insurance, Consumer Protection, Industry Analysis, Asset Sales, Regulations and Examinations, and News and Events. The world of banking does not need to be overwhelming. The opportunities to properly manage your finances, find solid investment opportunities, and navigate the economic landscape are a mere point and click away. Anything you do not understand, bring it right back to Sense on Cents!!
LD
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I called my representative, Betty McCollum and told her “I am to little to fail”. I want a % of my retirement losses back, right off the top of her stimulus package.
Larry - in yesterdays hearing, Sheila was addressing the increased payments for the insurance the banks pay for FDIC. It is killing the smaller banks.
In a reuters article regarding Moody’s down grading Mortgage Backed Securities, they said things are going to get worse.
http://www.reuters.com/article/bondsNews/idUSN1942540820090319
She will be needing a lot of money. From Calculated Risk
FDIC Closes Sale of Indymac, Loses $10.7 billion
Link: http://www.calculatedriskblog.com/
Last line of the article:
The original loss estimate was $4 to $8 billion, and that estimate was later increased to $8.9 billion. Now it is $10.7 billion.
Again - Sheila is going to need more money
Fiscal…I believe the FDIC will tap a credit line at Treasury prior to aggressively ratcheting rates on the smaller banks. I could certainly be wrong and ultimately the FDIC will need to pay back that line so rates at all banks will likley head higher over time.
No doubt, she will need more money…soon.
Thank you LD for your posts, and for very judiciously selecting Economic All-Stars. I was pessimistic in one of my comments to you a while back regarding the trustworthiness of any of these players after they had the opportunity to learn the lessons of Enron, Tyco and WorldCom, etc. and instead their bad behavior intensified. I am grateful that you are identifying those that deserve notice, turning my pessimism into something positive. Thanks again.
CG…Thank you for your gracious comment. You can rest assured I am not in the tank for anybody and am only looking for those with real integrity. I appreciate your comment.
I do believe that Sheila Blair is the most competent person there. She understood this situation from the get go…no wonder none of the politicians or wall street folks like her and would rather have her side lined.
LD, When ATT was “to big to fail” they broke it up…years later the baby Bells became “whole” again, and this time no one said they were “to big to fail”.
The common definition of “economy of scale” should be renamed “to big to fail”.
What escapes me is trying to understand where the line is when it comes to the global economy and US anti-trust laws.
Many corporations are in a position of picking and choosing, playing the Feds,
Also if one is forecasting out 10 years and reads that the Deficit will run one trillion buckaroos a year for that span, how does one plan investments? That being the overhead of the Fed crowding out the market for dollars; are there trends?
The escalating cost that fiscalliberal points to are like “cost overruns”, which tells me that the CBO numbers will climb.
As Friday special, Turboman came up in conversation. The person I was speaking with said he liked Turboman. I asked Why!? Who would want Timmy would couldn’t do his taxes at Treasury? He said “I like him, but he’s a crook”.
I understand that Sheila Bair has written a few children’s books on saving money. I’ll bet they are excellent. I’ll be looking for them for grandchildren.