FDIC Insurance Limits and Indymac Bank Loan Modifications

[WhiskeyJim59]

the FDIC is BANKRUPT. Totally without funds. They were given 8 more years to become solvent.

The government will just print more money to cover them. We don't need government insurance, we need banks that are not over leveraged with trillions of derivatives bet off balance sheet. they are destroying free markets.

[MiCasaMiDinero]

The FDIC can ran out of funds but it cannot go bankrupt.

If the FDIC were to ran low in in funds, they can increase the premiums charged to member institutions (banks and thrifts).

If the FDIC still needed more funds, the US Government would step in and provide it with more funds. Whether people like it or not, the US Government will print more money (if needed by the FDIC) to protect the deposits covered by FDIC insurance.

[FilmBorne]

Very sad.... this is country has turn into socialism. you can get bank loan those who scored A+ and B- in school. They check your school records.

[TrueNovice]

Most medium size business need more than $100,000 to meet monthly payrolls and purchase agreements. They need to increase the FDIC amount from $100,000. $100,000 is way too low, and will cause more bank runs like at WAMU.

[MiCasaMiDinero]

If the FDIC was to insure more than $100K, banks would have to pay a higher fee for it. Banks would then turn around and pass on the expenses on to the consumer. It would also mean that the FDIC would have to put up more money if a bank failed and there was no other institution willing to buy it.

If anyone has more than $100K, you have the option to deposit money up to the insurance amount in different banks/accts in order to be protected.

[TrueNovice]

I think the banks would be forced to absorb all or most of the cost as an expense. In a competitive environment,they could not charge fees directly or give a lower interest rates. But if WAMU could have told their depositors that "your accounts are secure, we have bought additional FDIC insurance,in excess of $100,000, you can hold $500,000 FDIC protected at our bank,they would have done so to keep their depositors. Banks don't have the option now. They are locked in to the $100,000 amount.

[MiCasaMiDinero]

I dont think I can call this market as competitive for banks.

The reason why so many people pull out of WAMU even if they were under the FDIC limits was because of public fear.

We fear what we dont understand and a lot of people dont understand what FDIC insured means. Therefore people feared that they would loose all their money even if they were under the FDIC limits.

[TrueNovice]

You got over $100,00 sitting in your bank account, I would guess you are not too stupid.WaMu officials claimed that's what happened - people w over $100,000 moved their money out. The IndyMac bust was not exactly show seamless coverage when the FDIC took it over. Once IndyMac went bust and those scenes were on the TV, of the long lines and cops roughing up people, I guess any hint of trouble scared people away from the other banks.