Archive for the ‘FDIC’ Category

Households, Businesses Have Stopped Spending; Now It’s Congressional Responsibility Time

March 6, 2009

Here is the top economic news today:

–Unemployment reached a level not seen since 1983.

–The stock market hasn’t been this low since 1997.

–The Senate refused the president’s $410 billion omnibus spending bill last night, necessitating a continuing resolution at last year’s spending levels, at least until the omnibus can be reconsidered next week.

–The Republican Leader in the House, John Boehner, has called for a government spending freeze.

–The head of the Federal Deposit Insurance Corporation (FDIC) has warned that the fund insuring Americans’ bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts.

–The Treasury Secretary’s pick as his number one deputy withdrew her name from consideration last night.  The top 17 senior posts at Treasury are vacant with no names announced to fill those posts.  A Senate hearing was cancelled yesterday because Treasury could not cough up a reporesentative for the hearing.  And as for Mr. Geithner himself, Warren E. Buffett has said: “Beware of geeks bearing formulas.”

–A Record 31.8 million Americans now get food stamps.

http://money.cnn.com/2009/03/05/ne
ws/economy/foodstamps.reut/index.ht
m?section=money_latest

Worried now?  I am.  especially since President Barack Obama wants to spend untold trillions still: on health care, bank bailouts, foreclosure and mortagage subsidies, a conversion of the nation’s energy system from oil, gas and coal to wind and magic, and still more.

The president already has said mean things about the engine drivers of the American economy, and made it clear he intends to raise their taxes and cut their perks and pay.  Consequently they have decided to invest less and hire fewer worker.  You would have done the same.

All homeowners will lose some of their mortgage interest tax deduction under the Obama plan: a strange idea during a housing crisis.

And we can all expect to pay more for everything when this huge debt we are developing turns into the likely ugly dragon of inflation.  Add to that oil and gas prices which will likely rise with OPECs help and the president’s “cap and trade” idea for energy and carbon limits and PRESTO: we could have a real economic meltdown.

I’m with Republicans in the House and Senate: this is a good time to kill the 9,000 earmarks contained in the omnimbus and settle for a continuing resolution to finish out this year.

Related:

WASHINGTON (AP) — The top Republican in the House is seizing on the latest spike in unemployment to call for a freeze on government spending and to urge President Barack Obama to veto a $410 billion spending bill.

Rep. John Boehner, R-Ohio, said the jump in unemployment to 8.1 percent and the loss of 651,000 jobs in February is a sign of a worsening recession that demands better solutions from both parties.

Boehner criticized the spending bill as chocked full of wasteful, pork-barrel projects. The Senate postponed a vote on the bill until Monday amid the criticism.

Boehner said he hoped Obama would veto the bill. He urged the president to work with House Republicans to impose a spending freeze until the end of this fiscal year.

More Related:
http://michellemalkin.com/2009/03/06/hou
se-republicans-push-for-spending-freeze/

******
WASHINGTON – The head of the Federal Deposit Insurance Corp. has warned that the fund insuring Americans’ bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts.

FDIC Chairman Sheila Bair acknowledged, in a letter to bank CEOs, that the new increased fees and hefty emergency premium the agency voted to levy last week will bring a “significant expense” to banks, especially amid a recession and financial crisis when their earnings are under pressure.

“We also recognize that assessments reduce the funds that banks can lend in their communities to help revitalize the economy,” Bair wrote.

But given the accelerating bank failures that have been depleting the deposit insurance fund, she said, it “could become insolvent this year.”

Read the rest:
http://news.yahoo.com/s/ap/200903
04/ap_on_bi_ge/fdic_bank_fund_w
arning

*****

Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures.

Read the rest from The Wall Street Journal:
http://online.wsj.com/article/SB1236
30125365247061.html

Related:
Unemployment Highest Since 1983; Business Leaders Have No Confidence in Obama Economic Plan, Team

American Workers, Businesses Cut Back; Obama Launches Spending Spree
.
Presidency of Fear

Obama’s Brazen Deception: Why The Stock Market Won’t Recover Soon

 Senate Halts Obama Spending; At Least For The Week End

 Obama plan to prevent foreclosures won’t help many California homeowners

“People that create American wealth are going on strike”

Obama’s Economic Strategy Akin To LBJ’s Vietnam Fiasco: “Pour In More”

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

February 9, 2009

The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

By Mark Pittman and Bob Ivry
Bloomberg
.
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

Read the rest:
http://www.bloomberg.com/apps/news
?pid=washingtonstory&sid=aGq2B3XeGKok

Stimulus: Republicans Have Plan To Help All Current, Future Home Owners

February 3, 2009

The current stimulus plan passed by the House and sent to the Senate leaves “housing pretty much unaddressed,” says Senator Lindsay Graham (R-SC).

“Housing was one of the causes of this mess and the stimulus needs to work that out,” said Republican Graham.

Graham favors a “Housing Trifecta:”

1. Money for the FDIC to hold off future foreclosures.

2.  A $15,000 tax credit for any new home buyers to lessen the glut of unsold houses.

3.  A national offer to renegotiate mortgages at 4%  interest rate, guaranteed.

Graham said this ould provide “an enormous boost to our economy in the short and long term.”

Bank bailout could cost $4 trillion

January 28, 2009

The cost of the bank bailout is likely to be much higher than $700 billion.

While the Obama administration hasn’t asked Congress for more money yet, some experts warn that government spending on support for struggling financial services companies will ultimately reach into the trillions of dollars.

The first half of the controversial $700 billion program to help banks has already been spent — mostly on buying up preferred shares of troubled banks.

By Colin Barr, senior writer
Fortune

Part of the remaining $350 billion may be used to purchase troubled assets from bank balance sheets and place them in what Federal Deposit Insurance Corp. chief Sheila Bair has dubbed an “aggregator bank.”

And while taxpayers will surely recover some of that sum eventually, more money is likely to be needed in order for the bank rescue to work.

“The amount of working capital you’d expect the government to take into this would be around $3 trillion to $4 trillion,” said Simon Johnson, a senior fellow at the Peterson Institute for International Economics and author of its Baseline Scenario financial crisis blog.

Johnson, who until last year was the chief economist at the International Monetary Fund, said that banks will need more rounds of capital from the government because their cushion against losses is too thin. He also said that there is a need to get rid of some of the toxic assets weighing on financial institutions before they can recover.

Read the rest:
http://money.cnn.com/2009/01/27/news
/bigger.bailout.fortune/index.htm?postve
rsion=2009012711

Obama team weighs government bank to ease crisis

January 18, 2009

The incoming Obama administration is considering setting up a government-run bank to acquire bad assets clogging the financial system, a person familiar with the Obama team’s thinking said on Saturday.

The U.S. Federal Reserve, Treasury and Federal Deposit Insurance Corp have been in talks about ways to ease a banking crisis that is once again deepening — and a government-run “aggregator bank” is among the options.

By Tim Ahmann
Reuters

Outgoing Treasury Secretary Henry Paulson and FDIC Chairman Sheila Bair both said on Friday a government bank was one of a number of ideas U.S. regulators had been discussing.

The source said advisers to President-elect Barack Obama, who takes office on Tuesday, were also considering the idea of an aggregator bank among a range of options that could be pursued.

 
Above: Printing Money?

David Axelrod, a top adviser to Obama, told Reuters the new administration would have something to say about a fresh approach to the financial crisis in “the next few days.”

“I’m not going to get into the structure of how we’re going to approach the revamped financial rescue package,” Axelrod said after speaking to a conference of mayors in Washington.

“What we have to do is approach this with a lot more transparency on the front end.”

Read the rest:
In Britain’s Bank Bailout, Taxpayers Face Years of Debt: How About in the US?

Read the rest:
http://finance.yahoo.com/news/Obama-team-
weighs-government-rb-14091318.html