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It is only 500 Billion but

Sat, 03/07/2009 - 2:32pm — connecticut man1

Should we be worried that Dodd wants the Treasury Department to loan it to the Federal Deposit Insurance Corporation when they usually have only a 30 Billion line of credit?

[update] In a banking version of an Imelda Marcos like closet explosion, BILLIONS of other shoes drop...

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I really am asking this...

By connecticut man1 on Sat, 03/07/2009 - 5:17pm

And it is why I posted the diary here, since most of you have a better handle on the big picture.

They had 30 billion and burned it up on failed banks already. What are they thinking now? About a 1600% increase in failed banks coming down the pike? What else would the FDIC need the money for because I (honestly) don't know what, other than paying out to depositors of failed banks, the FDIC does?

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FWIW...

By lambert on Sat, 03/07/2009 - 5:26pm

... with the caveat that if I really knew anything about money, I'd have some ... here's Yves on the FDIC. She points out that the FDIC also had to ask for more money in the S&L crisis. So, to me, there are bigger things to worry about (like where the trillions went). Now, if they say to the FDIC, we don't have any money for you, then I would worry indeed. And I'd also watch what's given to the FDIC carefully and where it goes, to make sure that the looters aren't creaming off yet more. But that's standard operating procedure....

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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That was part of what I was thinking.

By connecticut man1 on Sat, 03/07/2009 - 5:31pm

Is this a backdoor way to give even more money to the criminal bankers?

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Ooh, I misread...

By lambert on Sat, 03/07/2009 - 5:41pm

I thought $30 billion was it, and that's chump change. $500 billion is real money. So yes, we should watch it -- though my sense is that the FDIC is pretty transparent... Not first place I'd try to move the money...

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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FDIC update

By lambert on Sun, 03/08/2009 - 10:41am

Baseline Scenario seems to be encouraged by all this. Good.

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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Bernanke testified there's no mechanism to nationalize banks

By jawbone on Sun, 03/08/2009 - 11:20am

and David Brooks recently keeps saying there's no legal basis to nationalize banks. Are they both playing with the word "nationalize"?

Bcz the FDIC "nationalizes" as in temporary take over and then sale of assets of failing banks whenever necessary.

What is David Brooks doing/saying? Other MCM* pundits (heard Evan Thomas doing it today) are picking up this phrasing as well, which means it's on its way to becoming pundit truth or conventional wisdom.

*MCM--Mainstream Corporate Media

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Brooks, Bernanke, and now Blinder: Bogus

By lambert on Sun, 03/08/2009 - 12:07pm

See Yves.

Quite a few readers have said something along the lines of: "I'm opposed to nationalization, the banks should be put into receivership." Hate to tell you, they are the same thing.

When a bank fails (technically, the relevant regulators, often state level, deem it to be insolvent, and the FDIC rides in) the FDIC does "own" it. The assets and liabilities are in the hands of the FDIC, it determines how to dispose of them. However, its preference is to seize the bank on a Friday and have the deposits and branches in new hands by Monday. The fact of FDIC ownership is thus not apparent to the public. However, when Continental Illinois failed in 1984, it took nearly a decade for it to be sold (I forget the details, but if my recollection is correct, a reader said it was a real garbage barge).

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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So I am reading that Dodd story right.

By connecticut man1 on Sun, 03/08/2009 - 4:13pm

I think? This is a sign of some major bank failures being prepared for.

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"Good" by comparison...

By lambert on Sun, 03/08/2009 - 5:20pm

... to another orgy of looting. Sorry that wasn't clear. I guess my baseline is pretty low these days.

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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That is ok.

By connecticut man1 on Sun, 03/08/2009 - 5:34pm

Between the financial lingo, the lingo that you all seem to have personalized and the extreme amount of snarkitude around here, sometimes I honestly don't have a clue what you all are talking about until I click through to the links involved or I read another diary on it. LOL

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Snark? Corrente?

By lambert on Sun, 03/08/2009 - 6:25pm

What's wrong with you?

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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