THE BORE
General => The Superdeep Borehole => Topic started by: Human Snorenado on March 11, 2009, 05:53:49 PM
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From the "you can't make this shit up" file... (http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/?page=full?ref=fp1)
WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
So when can we start killing people for this shit again?
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cra
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you have got to be shitting me.
it's like our financial elite are petulant spoiled children and the babysitters are in-laws trying to make nice with the parents so they let them do what they want
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Federal agency doesn't work as intended. Film at 11
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Federal agency doesn't work as intended. Film at 11
More like "Captains of industry ignore obligations, pay criminal Republican congresscritters to protect them. Film at 11."
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i think you can amend that to say criminal congressman, because corruption is in both parties
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i think you can amend that to say criminal congressman, because corruption is in both parties
Yeah probably, but the article specifically says 1996-2006, which was when Republicans were in charge of Congress, so whatever.
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Can I have car insurance free for 10 years, please? My insurance company is well-capitalized and it's very unlikely I'll have an accident.
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loss for words...
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Can I have car insurance free for 10 years, please? My insurance company is well-capitalized and it's very unlikely I'll have an accident.
Only if you buy insurance from the government.
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Can I have car insurance free for 10 years, please? My insurance company is well-capitalized and it's very unlikely I'll have an accident.
Only if you buy insurance from the government.
Of course, if the govt. had tried to forcibly collect those unpaid premiums, you wouldn't have any problem with such interference in the blessed free market.
Of course. :smug
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At least the insurance that banks bought on the free market is working :teehee
Whose getting bailed out?
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Of course, if the govt. had tried to forcibly collect those unpaid premiums, you wouldn't have any problem with such interference in the blessed free market.
If it's not too late I say collect that shit right now.
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At least the insurance that banks bought on the free market is working :teehee
Whose getting bailed out?
:rofl
What a fucking idiot
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Not only did they not have to pay for insurance they are getting the bailout. Government at it's finest.
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Not only did they not have to pay for insurance they are getting the bailout. Government at it's finest.
This, of course, is the perfect argument for a weaker and less activist government.
Of course. :smug
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Not only did they not have to pay for insurance they are getting the bailout. Government at it's finest.
This, of course, is the perfect argument for a weaker and less activist government.
What? The argument that government doesnt work?
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You really are a very simple person, aren't you?
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You really are a very simple person, aren't you?
I'm not the person who argues in favor of a broken system and then gets angry when it falls apart.
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You really are a very simple person, aren't you?
I'm not the person who argues in favor of a broken system and then gets angry when it falls apart.
What is this delicious, delicious smell? Ah, the ironing. 'tis delicious.
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Has FoC been laid off? He's spending a lot of time on evilbore for some reason. Poor Triumph, Mandark and Drinky just can't keep up with his subtle arguments.
:bow GOLD :bow2
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I wouldn't pay my bills either, if I knew they weren't going to be enforced (yes I would, but not everyone has a conscience). The longer this recession goes on, the more it looks like we should just purge the financial sector (public and private) as a whole and just start over.
Anyways, anyone else surprised to hear that Citi was profitable in the first 2 months of this year? yeesh
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I wouldn't pay my bills either, if I knew they weren't going to be enforced (yes I would, but not everyone has a conscience). The longer this recession goes on, the more it looks like we should just purge the financial sector (public and private) as a whole and just start over.
Anyways, anyone else surprised to hear that Citi was profitable in the first 2 months of this year? yeesh
If it really was profitable (can't rule out cooking the books at this point - Pandit is surely a desperate man), I'm guessing it's just because all that cash that came out of the markets is just sitting in Citi short-term accounts. Citi is unloading assets at such a rate that at some point it will become profitable, albeit at a huge cost. I can't believe it would happen so soon though.
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Well, to be fair the valuation measure that matters more is recurring earnings, which excludes infrequent and unusual (lol) expenses such as restructuring charges. That's a good point Cormac, I didn't think about the possibility that Citi is investing all of that capital :lol. I guess we'll actually find out when financials are released instead of relying on an internal memo
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This country is so screwed.
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So the article doesn't paint the full picture, though it's close. Both Repubs and Dems "prevented" the FDIC from collecting premiums from banks. Repubs because they are opposed to the system of, golly gee, having the industry pay for insurance premiums (on the premise that good banks shouldn't pay for bad banks...they seem not to understand the whole insurance thing or the systemic risk of a bank run propagating throughout the system). Dems because they didn't want small community (and minority-owned) banks to pay for premiums when there were larger, wealthier banks who could shoulder the full brunt. Donald Powell, Bush's nominee to the FDIC in 2002, accommodated the political wishes of Washington as they aligned with his own of reducing the regulatory force of the FDIC (his one notable policy statement: index the insured level of $100,000 to inflation). How was he going to pay for that? Didn't need to, everything was rosy back then. Banks weren't failing every week.
The only banks paying into the FDIC reserve fund were national and large regional banks. Funnily enough, most of the banks that the FDIC directly regulates (as opposed to merely being the insurer of deposits) haven't paid premiums for the timeline given by the article. Most banks paying into the fund are regulated by OTS (the gutless wonder allowing CC companies to rape you and WAMU to blow up), OCC, or the Fed.
The memo sent out by Sheila Bair on March 2nd (entitled, Important Message from FDIC Chairman Bair for Bank CEOs on Assessments) gently reminds all banks that as the consumer of insurance they should pay an assessment (premiums) for the product. Like you pay Progressive for your car insurance...crazy notion, I know.
FDIC has been getting a ton of pushback from banks, small and large, that this is not the time for premiums. Better yet, they would like to see the public through the use of bailout funds contribute to the reserve.
If anyone saw 60 Minutes' piece on the FDIC last week, you saw an example of how the fund is being rapidly depleted. Heritage Community Bank in IL, was "sold" to MB Financial for the price of the FDIC entering into a loss-share agreement where the FDIC is responsible for 80% of loan losses. When you have few to no buyers, you do what you can!
Or you sell loan portfolios to PennyMac, run by former Countrywide execs, for pennies on the dollar. Welcome to your new overlords, same as your old ones.
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Maybe this can be a warning to future generations? While this is definitely partly the government's fault, a lot of blame can also be put on the banks.
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Maybe this can be a warning to future generations?
That's probably what people said in the mid 30's and again in the early 80's.