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Federal bank insurance fund dwindling fast
FEDERAL INSURANCE FUND DWINDLING FAST
By Marcy Gordon
Associated Press
Article Launched: 09/16/2008 08:56:23 PM PDT
WASHINGTON — Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort.
The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual, the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.
The Treasury Department has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns to J.P. Morgan Chase.
Eleven federally insured banks and thrifts have failed this year, including Pasadena-based IndyMac Bank, by far the largest shut down by regulators.
Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC's insurance fund, said Brian Bethune, U.S. economist at consulting firm Global Insight.
"We've got a ... retail bank run forming in this country," said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics...'
http://www.mercurynews.com/politics/...284?source=rss
---------------------------------------------------------------------------------------
Federal bank insurance fund dwindling fast
FEDERAL INSURANCE FUND DWINDLING FAST
By Marcy Gordon
Associated Press
Article Launched: 09/16/2008 08:56:23 PM PDT
WASHINGTON — Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort.
The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual, the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.
The Treasury Department has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns to J.P. Morgan Chase.
Eleven federally insured banks and thrifts have failed this year, including Pasadena-based IndyMac Bank, by far the largest shut down by regulators.
Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC's insurance fund, said Brian Bethune, U.S. economist at consulting firm Global Insight.
"We've got a ... retail bank run forming in this country," said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics...'
http://www.mercurynews.com/politics/...284?source=rss
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