***UPDATE2 (August 30, 2009). I just noticed something very interesting with the numbers. I'll let a financial guru tell me if it is significant or merely a coincidence. I stated that the FDIC insurance fund had a negative $5.5 billion balance ($5,514,200,000 to be exact). In the recent 2nd Quarterly Report, the FDIC admitted that it had to charge an emergency fee to raise $5.6 billion. Coincidence?
Source: Bloomberg
***UPDATE (August 27, 2009). The FDIC says that it has $10.4 billion in the insurance fund as of June 30, 2009, which obviously contradicts the data I previously posted below where I said the FDIC was out of money. Allegedly, the FDIC was able to raise $5.6 billion in emergency fees from the industry to stay afloat. Therefore, I have revised the numbers and the below spreadsheet to reflect these new numbers and based on the FDIC's new numbers, the FDIC insurance fund is not yet out of money. I guess we will have to wait until the 3rd quarterly report.
The surge in failures prompted the agency to charge the industry an emergency fee in the second quarter to raise $5.6 billion to replenish its insurance fund, which fell to $10.4 billion as of June 30 from $13 billion in the previous quarter, the agency said.
Source: Bloomberg
***UPDATE (August 27, 2009). The FDIC says that it has $10.4 billion in the insurance fund as of June 30, 2009, which obviously contradicts the data I previously posted below where I said the FDIC was out of money. Allegedly, the FDIC was able to raise $5.6 billion in emergency fees from the industry to stay afloat. Therefore, I have revised the numbers and the below spreadsheet to reflect these new numbers and based on the FDIC's new numbers, the FDIC insurance fund is not yet out of money. I guess we will have to wait until the 3rd quarterly report.
FDIC Failed Banks & Insurance Fund Balance
FDIC Failed Banks Insurance Fund Balance ($5.5B Negative Balance as August 21, 2009)
FDIC Failed Banks Insurance Fund Balance ($5.5B Negative Balance as August 21, 2009)
The FDIC is officially out of money as of August 14, 2009 when Colonial Bank was closed, and seven (7) more banks have failed since Colonial failed. The current FDIC insurance fund balance is approximately NEGATIVE $5,514,200,000 -- namely the fund is overdrawn by over $5.5 billion.
In other words, the FDIC does not have the money to cover any future bank closings. Are you worried? Fortunately, I do not have much money in the bank, but if I did, then I would be taking it out and buying gold or silver.
How was this negative $5.5B figure calculated? Each time that a bank closes the FDIC issues a press release on its failed bank page with the specific bank details along with the insurance fund cost of that particular bank failure (click this sentence to see an example press release for the BankUnited closing back in May, 2009). If you do not trust my numbers, you can look up the associated cost for every bank that has failed since March 31 using the FDIC-provided numbers and subtract these costs from the FDIC insurance balance.
As of March 31, 2009, the FDIC insurance fund had a balance for $13B. I drafted up a spreadsheet (attached above) that includes each bank that has failed since March 31, 2009 along with its applicable charge against the FDIC insurance fund and the insurance fund's running balance.
If you review the spreadsheet, you will see that the insurance fund balance went negative after the Colonial closing.
Why is this not on the news? Is this going to be the information that leads to a U.S. bank holiday next week or in the near future? Something will need to be done, because otherwise there may be an imminent run on the banks.
Source: FDIC
In other words, the FDIC does not have the money to cover any future bank closings. Are you worried? Fortunately, I do not have much money in the bank, but if I did, then I would be taking it out and buying gold or silver.
How was this negative $5.5B figure calculated? Each time that a bank closes the FDIC issues a press release on its failed bank page with the specific bank details along with the insurance fund cost of that particular bank failure (click this sentence to see an example press release for the BankUnited closing back in May, 2009). If you do not trust my numbers, you can look up the associated cost for every bank that has failed since March 31 using the FDIC-provided numbers and subtract these costs from the FDIC insurance balance.
As of March 31, 2009, the FDIC insurance fund had a balance for $13B. I drafted up a spreadsheet (attached above) that includes each bank that has failed since March 31, 2009 along with its applicable charge against the FDIC insurance fund and the insurance fund's running balance.
If you review the spreadsheet, you will see that the insurance fund balance went negative after the Colonial closing.
Why is this not on the news? Is this going to be the information that leads to a U.S. bank holiday next week or in the near future? Something will need to be done, because otherwise there may be an imminent run on the banks.
Source: FDIC
No comments:
Post a Comment