Sunday, November 1, 2009

More bank failures

OK some simple math. These 9 banks had combined assets of 19.4 billion, and deposits of 15.4 billion. Assuming that "assets" are actually money lent out, this is 4.0 billion dollar shortfall.

They say the FDIC will take a hit of 2.5 billion.

That would mean that somehow $1.5B of depositor money is not insured.

Think about how absurd the current overall situation has become. The FDIC expanded its coverage from $100,000 to $250,000 last year. So people are probably OK with keeping their deposits concentrated. What if on Friday morning the insolvent FDIC declares that in order to better protect its constituents, it will go back to $100,000. And then after market close on Friday afternoon, they announce 150 banks have been taken over. Just saying...anything is possible.

Any bank that is a corporation and not personally owned by a group of investors that have serious skin in the game is suspect.

Addendum--after I wrote the above post, CIT announced bankruptcy--again.

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