FDIC seeking temporary unlimited Treasury loans for bank deposits

October 1, 2008 by · Leave a Comment
Filed under: Industry News 

Well this is pretty serious to have our depositor protection agency now asking for such unprecedented power to protect depositors.  This begs me to wonder if we have a wave of banks failures about to happen and they are trying to get authority in place to stem the losses that may occur when we have multiple banks failing.  I believe we should project the depositors but giving unlimited authority to anyone has no place in our democratic republic.  The pressure is now on and we need to let our representatives know, now is not the time to panic because things they could do in these times will create a bigger mess that we will need to take a decade or more to correct.  By socializing all these losses you just create price inflation and in the end the same fate will cover us all.

Press Release:

The Federal Deposit Insurance Corporation is seeking temporary unlimited borrowing authority from the Treasury Department, according to a copy of the final Senate bailout legislation on Wednesday.

In the bill, which is expected to be voted on by the Senate later Wednesday, the FDIC is seeking the borrowing authority through the end of 2009.

The FDIC currently insures up to $100,000 per depositor and up to $250,000 per individual retirement account at insured banks.

The increase would be a big boost for the FDIC’s ability to insure bank deposits and send a message of confidence to individuals and businesses thinking twice about leaving their money in their banks.

The agency has access to a total of $70 billion in short- and long-term lines of credit. It can also charge banks higher premiums.

The 451-page Senate bill would increase the amount of deposit insurance coverage to $250,000 through next year from the current $100,000 in a bid to reverse the deteriorating crisis of confidence in the marketplace.

The FDIC had asked for an unlimited cap on insurance limits but was rejected by lawmakers, according to sources familiar with the FDIC request.

White House spokesman Tony Fratto said the proposal to lift the cap was an “important” improvement that would benefit banks.

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