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In An Attempt To Reliquify Economy, FDIC Starts To Retroactively Pay Tens Of Thousands Of Dollars To Depositors In Failed Banks
Nothing like the US government bailing one out for the stupidity of investing in a ponzi kabal. Earlier today, the FDIC decreed that it would increase deposit insurance for depositors in banks that failed in 2008 in the states of MO, AR, CA, FL, KS and NV. As a result of this action, 9,500 depositors would end up receiving between ten and hundred and fifty thousand dollars, courtesy of a retroactive increase in the "maximum deposit insurance amount to $250,000." The rule was made retroactive beginning January 1, 2008. Pretty soon, all money ever lost, be it in bankrupt banks, or in bed investment will be recoupable, as the administration does everything it can to get some cash - any cash - in the hands of Joe Sixpack.
From the FDIC:
The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Barack Obama today permanently raised the maximum deposit insurance amount to $250,000. In addition, the Act made this increase retroactive to January 1, 2008.
The provision making the law retroactive means that the $250,000 deposit insurance amount applies to banks that failed between January 1 and October 3, 2008. These insured institutions are:
* Hume Bank, Hume, MO
* ANB Financial, N.A., Bentonville, AR
* IndyMac Bank, F.S.B., Pasadena, CA
* First Priority Bank, Bradenton, FL
* The Columbian Bank and Trust Company, Topeka, KS
* Silver State Bank, Henderson, NVThis retroactive increase has reduced the number of uninsured depositors at these failed institutions from more than 10,000 to approximately 500.
For those readers lucky enough to be among the lucky winners in this particular round of the Obama lottery, you can get more details here.
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Maybe there is hope for Madoff's investors after all. Get in line.....
"Get to tha choppa!"
"welcome to the paaarty, bernanke... i mean richter..."
i could sure go for a six pack.
LOL!! Does Bernanke get both arms ripped off by the unenclosed elevator?
As much as I can't stand the bail outs, something that most people don't realize is that many a SMB use bank accounts for payroll. Those accounts sometimes top 250K for bi monthly payrolls. At an average of 50K/employee/year, 120ish employess would easily be above that limit. These businesses have no choice but to bank their payroll funds.
These businesses have no choice but to bank their payroll funds.
Wouldn't maintaining accounts in multiple institutions have averted any problems in this area? Sure, it's burdensome, just like compliance with any other government regulation, nevertheless...
Sure. And they can generate their own electricity and sell it back to the grid by having the employees sit at exercycles hooked to generators.
Seriously, though, while possible, it's not always practicable. And sure, they can also outsource to ADP. My point is rather:
The SMB's weren't gambling, just running their businesses.
DAVID (Albert Brooks):
"The Desert Inn has heart! The
Desert Inn has heart! The Desert
Inn has heart!" Something like
that. See what I mean?
SHUSTER (Gary Marshall):
That's a nice jingle. Mr. Howard,
let's assume you're serious here.
What if this caught on? Could you
imagine what would happen? Why,
we would have to return everybody's
losses. The casino would just
crumble. We couldn't pay our bills.
You know the casino accounts for
a great deal of our profits
DAVID
I understand. Of course, you don't
pay back everybody's losses. You
make a distinct division between
the bold, who are out there searching,
and all the other schmucks, who come
here to see Wayne Newton.
Not the nest egg !!??!!
Do you know what a nest egg is? You are never to use those two words again in a sentence...if you’re in the woods, you point and say the bird lives in a round stick, and you eat ‘things’ over easy on toast.
all money ever lost, be it in bankrupt banks, or in bed investment will be recoupable...
So, they're refunding alimony payments, too?
Uh! Are any of the Congressional Seats in jeopardy in any of these selective states?
One more thing...I lost money to the F**KING IRS...Where do I go to get it back?
This just goes to show you, that when the deflationist say the government is limited in its options to expand the money supply, they lack any semblence of imagination.
You got that right. The helicopters are aloft; queue "Ride of the Valkyries."
you asked: http://www.youtube.com/watch?v=Gz3Cc7wlfkI
No wonder Charlie doesn't surf.
+100 G. Marx - I could have sworn I saw Bennie B at Universal Studio's Suessland looking for inspiration before his testimony this week - He was focusing very intently at the 'One Fish, Two Fish, Red Fish, Blue Fish' ride mutterling "I simply don't get it!" - Imagination & a Printing Press - the world is yours...
The deflation/inflation debate has been raging for years, but yet, not once did I ever see this being suggested as a possible policy option for the feds. Even outside the context of the monetary debate, I never read where anyone thought the feds would take such an action as this. And what of this action? Well I'd say it's is not only brazen, but it also reaffirms the understanding that inflation or deflation is always a policy decision under a purely fiat regime. One has to wonder what either Geithner or Bair thought of this little slice of the financial "reform" bill? An FDIC that's almost broke (if its not there already) and whose shortfalls must be met by the US Treasury. Swell.
While it matters who's buying the treasury paper at the auctions, what matters more, is that money makes its way into the economy. As it enters the economy it matters not who is eventually owed payment. That cash goes into circulation and takes the path of least resistance into an asset class and "inflates" it.
We all know that there are few fundamentals on which the market rose over the past year beginning in March '09. Price inflation isn't always a phenomena of consumer goods and staples. I'd be willing to wager that inflated currency also found its way into the treasury markets. So what we've learned is that inflating is the continued bias, but determining which asset classes will benefit from the fresh cash isn't always so easy to call in the short run. Additionally, the congress and their reckless spending and yearly deficits, continues to be the number one cause of inflated money supplies entering the US economy.
No kidding. The "I DESERVE IT" mentality isn't going away until nothing remotely recognizable remains of this country. Until then they can just keep shoveling endless torrents of 1s and 0s at the bottomless grease-spattered all-consuming collective maw of the looters and moochers.
I'm surrounded by frickin' idiots.
Bankruptcy reform - make it trivial to write down unpayable debt - is the way to go.
Very interesting proposition pyite - would you care to elaborate as you have piqued my curiousity -
This is 100% cynical, but rich people save money while poor people spend it.
The fundamental problem with our economy is unpayable debt - be it overdrawn consumers, megabanks with toxic derivatives, or government on every level. It is good that the new financial reform bill at least tries to help with resolution (aka bankruptcy for financial companies) - but I believe that the 2005 bankruptcy tightening is also part of the problem with our slow "recovery".
More cynically, giving more money to someone who had more than $100k in a savings account won't help the economy since they will just save it. If someone with no assets and $20k of credit card debt can quickly & easily declare bankruptcy and start over, they will likely just run up the debt again. This is obviously deflationary, but it is offset by the $trillions in funny money that the Fed is shoveling to the banks. Considering that people with major credit card balances owe the money to a company that received $billions in taxpayer dollars, it is reasonable to make the best rules for the macro-economic picture.
Obstacles to this are huge, though, since banks have multiple lobbyists per congressman. The smart money is on hyperinflation of course, rather than creditors writing down debt.
global jubilee
TD - Do you sleep? Great post
Tyler Durden sleeps in shifts.
So which Congress critter voted themselves money? Is that you, Nancy? Oh come on, there's no way you or any of your friends got away unscathed from IndyMac.
Joe Sixpack gaining from a retroactive increase of FDIC insurance from $100k to $250k? More like Joseph Adolphus Sixpack IV.
+IV
I wonder if anyone is going to compensate me for lost interest when I pulled my money out of suspect institutions and left it in t-bill funds earning 15 bps. Seems unlikely.
I'd LOVE to see data on the interest that these 6 banks were paying on deposits - anyone doubt that it was higher than average?
they are not getting this money instantly...they had to wait, no interest..
I think I left ten bucks in my pocket when I sent some slacks to the dry cleaner. Also, about fifteen years ago I bought a bag of potato chips from a vending machine in Keokuk, Iowa, but they were stale.
So do I call Obama directly for a refund or can I just file online? Can Timmy just credit my PayPal account? I swear I'll spend the refund at Walmart to help jumpstart the economy. I might even use it as downpayment on a house if you'll get Fannie or Freddie to back the rest of the purchase.
Oh, and I once drew to an inside straight when some other guy had a full boat showing. Cost me a couple grand. I assume that's also covered?
I left my shaving kit in a hostel in Zurich in 1998, can Jimmy Obama reimburse that loss? Bear in mind, I was without good American condoms for the remainder of my trip abroad.
they are taxing banks to make individuals and small businesses closer to whole on deposits they lost at banks...only in America is this seen as wrong...we always side with the rich, the connected, never want them to pay, but regular folks should take their lumps everytime, helping regular people out is a moral outrage apparently...banks pay into an insurance pool run by govt....after a couple of brutal hurricaines in Florida and lousy investment years, private, homeowner insurers raised their rates so they could stay solvent and make good on claims...but if the govt does same thing with bank insurance, they are evil....
Where do rich bankers get the money to pay taxes?
Since when do the rich pay taxes?
Unprecedented moral outrage has made anything, anything, anything that the government does abhorrent. The most stringent outcries come from those who have nothing, therefore nothing to gain by the government's largess. It's a mental state that rejects all efforts by the government, no matter who gains. See? Simple.
i've been trying to figure out why i'm so mad about this - because you're right - the thing i said all along about the bailouts is that the government should have made depositors whole and let the banks fail, then used the difference between the bank bailout money and the money spent bailing out depositors to fund new, clean banks.
anyway, i think the problem with this is the retroactive nature, multiple years later. and the bigger problem is that the FDIC is insolvent - so it's not really taxing banks to make individuals whole, it's taxing ME to make individuals and small businesses whole.
Finally, it's more moral hazard - rewarding risk ignorance - although i do think it's somewhat unreasonable to expect the average scmuck to realize that his bank may not be solvent, even though I did, and I "paid the price" for my prudence by accepting a lower interest rate in lower risk intstruments, and now watch others reap the benefits of their risk ignorance. So, no - i'm not going to get carried away with the moral hazard card here.
you pay insurance on all sorts of things...but if govt collects it, you hate it, because you have been taught to love all that private businesses do, whether they do it well, uncorruptedly, fairly or not, and you have been taught to hate all that govt does whether it is a good idea or not. If your car insurance premiums went up because there was a massive hail storm that wipe the insurers clean because they did not price in the risk of such a once in 80 year storm, would you be this mad?
I agree the retroactive thing tho...in the middle of the fight about health care insurance, which so many in this country can't get at any price once they've had an illness, the Gulf state legislators were calling for flood insurance to be made retroactive, so people that got flooded in Katrina years ago could buy the insurance for the price of premiums they would have paid if they actually bought...so I guess govt insurance on houses is more important than health care...
we should be so lucky. can't hit the "monetize" button with no hands!
http://www.youtube.com/watch?v=uEWHbhLx_-Y
and Bernanke's out of bullets now!
http://www.youtube.com/watch?v=N-flQmtL_IQ
Ahh yes, this must be why gold is down. With all this 'gold bearish/dollar bullish' news I'm surprised that gold isn't completely worthless.
9500 people are going to split the initial $200m "check is in the mail thursday".
If one was cynical, one would look for those ichecks to be immediately redeemed for imerchandise.
http://news.yahoo.com/s/ap/20100722/ap_on_bi_ge/us_fdic_checks_in_mail
So all the money that was lost is now found. It's, it's like magic! The coming food riots should be fun.
This government is completely Lawless.
First Lesson in Lawschool: You can't make retroactive laws for all kinds of reasons.
One is that people have to be able to trust the Laws and the system and retroactive laws undermine that.
But maybe they got the the idea that nobody trust them anyways they don't care about that anymore.
Sad really. You are right. We have not had a rule of law for sometime now. Just personalities deciding, on a whim, who wins and who loses.
Correctomondo.
How long can the house stand with a failed foundation.
That's not a pile of ruble, it's unallocated resources.
"the administration does everything it can to get some cash - any cash - in the hands of Joe Sixpack"
Great! When can I expect to see it?
They've been trying to extend unemployment, but there are some knuckleheads who oppose it. Haven't you gotten your check yet?
Breaking news: ipads now on sale in MO, AR, CA, FL, KS and NV.
Bet they're free in Detroit, Chitcago, Oakland, Newark, and all the other places whose model we're taking nationwide.
Oakland has also just voted to permit giant indoor pot farms. Talk about strapped for cash.
Can I get back the tens of thousands of dollars I lost in the last few years please?
Next up tax credits for all unrealized losses on underwater mortgages and WFC goes to 50.
The game is now out in the open. There is not even a hint of shame or the fear of being called for who/what you really are.
Extend/Pretend..... say is this what trickle down was meant to be?
Get desperate and we'll throw you a line. Get more desperate, almost drown, then we'll toss some used life-jackets your way.
End game, too many drowners, too few life-jackets, life-jacket company broke, every man woman and child to themselves.
ORI
http://aadivaahan.wordpress.com
If prior FDIC coverage was $100K, it would be of morbid interest to find out how much it cost the looters to get this benefit of an extra $150K per account enacted. Likely a great ROIC . . .
Most probably, wallst told Ben and Tim "Please stop shoving money up our asses, because we're already chock full of it".
On a more serious note, though, I think this is probably a feasible solution short-term since it makes people happy (hey, the Gubmint is looking out for us regular joes), and it actually injects some liquidity to those who prop up the demand side. On the other hand from a long-term and strategic view it doesn't change anything in the current status quo and therefore does not eliminate the big brick wall up ahead.
Oh, and who's money will be the FDIC using anyway? I kinda understand that in today's love triangle between the Gov, wall.st and the taxpayers (including mainst) - the idea of money and it's ownership is getting more diluted by the day. But still, just humour me.
Hey they got to give the little guys something.
http://www.youtube.com/user/fiercefreeleancer
Great. How about replacing the 40% I have lost in my 'retirement' account? It seems only fair since the banks have had their risks completely nullified by government intervention.
Aren't retroactive laws outlawed by the constitution?