Once again, rather than making surviving banks and Wall Street pay for the disaster the country finds itself in, the FDIC, now rapidly running out of money as more banks fail, proposes its very own ponzi scheme.
The agency has asked banks to prepay deposit insurance fees now for the period 2010-2012. The banks get to list the fees as an asset, then charge it off as an expense once it’s paid.
The alternatives of course are not to the liking of politicians or bankers.
Politicians don’t want the FDIC to borrow from the US Treasury, even though it can by law, because this might be seen to be “bailing out the banks”, which as we know by now is only what happened in Goingbackwardville…
Bankers don’t want to pay extra insurance fees and say (apparently with a straight face!) they are worried that larger fees will limit their ability to borrow capital!!!
The FDIC solution assumes that there won’t be as many problem banks in 2012 as there are now. If it turns out they’re wrong, well, they can assess special fees on the banks or borrow from the Treasury!
Kicking the can down the road remains the only policy approach in Movingforwardville!
Gorilla thinks: “Irony is a wonderful thing. It too will be securitized faster than you can say Bernie Madoff!!!”
Tags: banks, FDIC, goingbackwardville, Madoff, movingforwardville, Ponzi scheme
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