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A Broke FDIC Expands Checking Account Insurance From $250,000 To Infinity

Tyler Durden's picture


A few days ago, the FDIC, broke as ever, with a Deposit Insurance Fund that was well south of zero at last check, announced, with delightful irony, that it was expanding its insurance on non-interest bearing checking accounts from the current $250,000 to, well, infinity. As in there is no upper limit on how much the FDIC would insure - the fact that it has no money at the FDIC to begin with being completely irrelevant. That's right, the broke FDIC basically said that it would guarantee up to $480 billion currently sitting in US checking accounts between December 31, 2010 and December 31, 2012. Yet is this nothing less than another Volcker-inspired plan to get capital out of multi-trillion money market industry and into consumer hands via easily accessible transaction accounts, and to encourage spending on useless trinkets like iPads? This could very well be the case.

As many will recall, earlier this year the Group of 30, headed by Volcker, came out with a recommendation to allow money market to suspend redemption without prior notice. We, along with many others, speculated that this was merely an attempt to spook MM investors into stocks. Well, it succeeded... half way. Investors did indeed take out money from mutual funds, whose current after-fee 7-day simple yield on prime funds is just 7 bps. However, they then used that money to buy not stocks, but fixed income, instead focusing on such securities as Investment Grade bonds and Treasurys. As a result the much expected ramp in stocks never really occured, and it was up to the Fed and the HFT mafia to keep ramping stocks as ever more outflows exited dometic equity mutual funds.

This latest action by the FDIC, as Barclays' Joseph Abate speculates, is nothing less than a comparable attempt to get Americans to take out theyr cash from money market funds and, now that the whole equity investment avenue is closed, to put it into checking account instead, hoping that once the money is one step closer to the end consumer (as it will reside in non-interest bearing transaction accounts), and easier to withdraw, the psychological element will be one of spurring consumption. Yet will this latest scheme to impact mass consumer psychology work? If past experience is any indication, the desired outcome will once again fall well short of the actual.

More details from Joe Abate on this latest scheme by the FDIC:

The FDIC recently released details about the Dodd-Frank financial reform bill’s requirement to provide temporary unlimited deposit insurance coverage. Unlimited deposit insurance would apply only to non-interest-bearing transaction (checking) accounts. It would be provided to all depositary institutions – there would be no opt-in – and importantly, there will be no explicit charge to the banks for the extra insurance. That is, unlike the similar Transaction Account Guarantee (TAG) program, there would be no special assessment or insurance premium for the coverage assessed on quarterend balances over the current $250,000/account limit. Instead, the FDIC will price its regular risk-based quarterly assessments to account for the additional insurance. But assuming the FDIC proposal goes through without major changes, the entire $480bn currently sitting in US checking accounts would be fully covered for the period between December 31, 2010, and December 31, 2012.

No discussion on just how the FDIC will insure not just all this capital, but all continue with its $100,000 insurance of traditional interest checking accounts, considering that the FDIC is broke. After all, if it gets to insurance getting actually paid out, it will be game over.

But of course, it is all about expectations. Which is why Abate believes this is merely a ploy to get money market holders to transfer their money from MMs to checking accounts, after conducting an appropriate cost-benefit analysis.

Unlimited transaction account coverage – even if temporary – poses a challenge for money market funds. At current levels, the average after-fee 7-day simple yield on prime institutional money funds is just 7bp. Thus, besides the insurance coverage, there is little difference between money fund accounts and checking account balances. Traditionally, this has not been the case, as money funds typically yielded more than bank deposits in order to compensate depositors for the absence of (limited) deposit insurance. On the surface, then, the provision of unlimited deposit insurance on a close substitute that also yields (close to) nothing could encourage institutional investors (those most likely to exceed the current $250,000 deposit insurance limit) to shift their balances back into banks.

Despite these super-low rates, money fund balances have held fairly steady since late spring. We suspect that part of the stability may reflect the fact that among institutional investors, the current amount of deposit insurance coverage ($250,000) is not sufficiently high to shift their cash allocation to banks. With only that level of coverage, institutions may feel more secure holding their multi-million dollar cash deposits at money funds, where the fund manager’s commitment to a stable net asset value acts as a weak form of insurance.

It is possible that unlimited transaction account insurance might tip the balance sharply in favor of checking account balances over money funds. If institutional investors prefer the FDIC’s explicit guarantee to the money fund sponsor’s promise to maintain a stable NAV, then money fund redemptions could increase. The pace of redemptions – if any – would ultimately depend on what value institutional investors place on having explicit principal protection. If this isn’t worth the 7bp they earn after fees on money fund deposits, they may stay put. But according to a recent Federal Reserve working paper, institutional money fund investors tend to be fairly flight prone – pulling their deposits quickly at the first sign of financial distress. (“The Cross Section of Money Market Fund Risks and Financial Crises,” P. McCabe, Federal Reserve Board working paper, September 2010.) This suggests a fairly strong sensitivity to principal protection over yield among the $1.2trn in institutional money in stable net asset value funds. As a result, some portion of these balances could leave for bank checking accounts. Of course, the value of insurance becomes apparent only in a crisis. As a result, with financial markets stabilizing, it’s possible that institutional money has become less flight prone. If true, the value of the FDIC’s insurance coverage might not be worth much for institutional investors. Until the insurance coverage takes hold at year-end, though, it’s not clear how much of the $1.2trn in institutional money fund balances could depart for banks.

We continue to be surprised by the eagerness of the administration to forcefully evacuate prime money market funds. The aggressive insistence to make life for MM investors a living hell, can only mean that should the true NAV of the majority of money markets be disclosed it would make the "breaking the buck" incident which nearly destroyed the system more than anything else in the days after the Lehman collapse a daily event. We hope we are wrong about this.


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Thu, 09/30/2010 - 17:35 | 616741 SpeakerFTD
SpeakerFTD's picture

Isn't there some law limiting the number of surreally stupid things the government can do in one day?

Thu, 09/30/2010 - 17:43 | 616765 MarketTruth
MarketTruth's picture

Yes, it is called the 2nd Amendment... provided the sheeple wake up from their slumber.

"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." -- John Adams 1826


"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen." -- Samuel Adams, speech at the Philadelphia State House, August 1, 1776.


"And I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property -- until their children wake-up homeless on the continent their fathers conquered... The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." -- Thomas Jefferson wrote on May 28, 1816


"When the people fear their government, there is tyranny; when the government fears the people, there is liberty." -- Thomas Jefferson

Thu, 09/30/2010 - 17:58 | 616794 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen." -- Samuel Adams, speech at the Philadelphia State House, August 1, 1776.

Take that, progressive dipshits.

Thu, 09/30/2010 - 18:15 | 616838 snowball777
snowball777's picture

Each generation should be made to bear the burden of its own wars, instead of carrying them on, at the expense of other generations. 
James Madison 

Take that, neocon dipshits.

Thu, 09/30/2010 - 18:29 | 616866 Quantum Nucleonics
Quantum Nucleonics's picture

In the spirit of your comment, tell you what, we'll (the 50% of America right of center) pay for Iraq and Afghanistan, while you (the 50% of America left of center) take care of ObamaCare, Social Security, Medicare, Medicad, Fannie, Freddie, TARP, Food Stamps, and other social welfare.

Thu, 09/30/2010 - 19:21 | 616999 Glaucus
Glaucus's picture

Which is why those of us who don't cling to the left-right continuum of the state, but reside at the "still point" above it, owe nothing.

Yours in freedom,


* Not Libertarian Party, just libertarian


Thu, 09/30/2010 - 19:29 | 617021 snowball777
snowball777's picture

Well said.

I find that politics becomes much more interesting if you look at it in terms of several axes instead of a single (easily polarizable) continuum.

Thu, 09/30/2010 - 20:11 | 617095 Glaucus
Glaucus's picture

I think of it in terms of a Hegelian dialectic -- i.e., thesis (left), antithesis (right), synthesis (libertarian) -- such that the state "whithers away" amid the (Internet assisted) increase in individual empowerment.  After all, in the words of someone who no doubt knew whereof he spoke:

"So long as the state exists there is no freedom. When there is freedom, there will be no state." -- Vladimir Lenin

Thu, 09/30/2010 - 22:47 | 617363 snowball777
snowball777's picture

I don't think it needs to be non-existent as much as fundamentally limited...ala Kant:


Fri, 10/01/2010 - 03:33 | 617580 i-dog
i-dog's picture

How do you plan to limit the growth of the parasite? The Founding Fathers tried and failed ... so, what is your cunning plan?

There is no service performed by the state that can't be provided more efficiently and effectively by private service providers.

Fri, 10/01/2010 - 03:39 | 617632 i.knoknot
i.knoknot's picture

it's a fair question.

my gut response is that the founding fathers didn't fail so much as did the folks that 'progressively' took the baton from them over the years, and who we have allowed to pervert their clear intentions.

sadly, based on their historic 'above-the-law' behavior and power abuses, the big-business establishment deserves *just* as much suspicion as the socialist' counter-response deserves.

i wish more folks realized that it doesn't have to be one or the other.  cultural momentum keeps insisting that it cannot be a new grey, rather than the well-known black or white. we could reign in business *and* insure personal liberties/accountability if we really understood that that is what we wanted to do. but that's too many syllables for most...

the simple answer would be to enforce the original laws as *intended* - not so much as they were written. easily said, but who establishes the intent... currently there are too many loop-holes and shrewd folks who have mastered the management of that ambiguity.

the founders' ideas were sound. what we have now is nothing like what they intended. it's the *current* model of execution that must be *disconnected* from their original intentions before we can try it again - with "new and improved" insurance against their abuse... (riiiiiight...)

never-mind. i don't have a plan either... dam.

Fri, 10/01/2010 - 05:49 | 617670 snowball777
snowball777's picture

So we can dissolve the army and navy, then? Because Xe rocks so hard? Please.

The FF didn't fail, our constitutional republic is more than capable of doing what is necessary to right this ship, if only the electorate would pull their heads out of their collective asses.

And what of services that the private sector is simply unwilling to provide? Or unwilling to provide at competitive prices (because they say...have a monopoly on healthcare in a state or something)?

Markets are awesome for some things, but only when they work (hear me CFTC and SEC?), and only when they are distributing a resource that can be treated as zero sum. Human life and the environment can't be effectively priced into that system, but it is those externalities that tend to breed revolution.


Fri, 10/01/2010 - 07:31 | 617702 i-dog
i-dog's picture

You need to expand your mind beyond the mediaeval imperialist warlord paradigm! Most modern humans are peaceloving souls who have no desire to go hunting for neighbours (right-wing warmongers and left-wing looters excepted).

In any event, a warmongering state confronting a libertarian enclave would face an asymetric nightmare ... every civilian armed and no "state house" from which to take over the reigns of taxation. There would be nothing in it for them. For examples, see: Switzerland (no standing army, navy or airforce ... yet even Hitler and Mussolini wouldn't attack because every civilian MUST be armed); Afghanistan (no standing army, navy or airforce ... yet they whipped Alexander the Great, the British, the Russsians and the USA); USA (the revolutionaries had no standing army, navy or airforce ... yet they whipped the British).

And who would fund a massive "Xe-like" force? I wouldn't and neither would anyone else who was presented with an optional bill for voluntarily maintaining a standing army and all their equipment for no apparent reason. If your neighbouring enclaves also had no "state house" managing the taxation of the slaves, there would be no point in invading them either. All wars are about taking over ownership (ie. taxation) of the resident slaves. No slaves = no point. Throw off your shackles!!!

The US electorate have "had their heads up their collective asses" since the very first congress in 1789 ... precisely because they just vote then go back to sleep while the corrupt pollies do what the corrupting oligarchs tell them to do. No pollies = no corrupt laws = no monopolies = no oligarchs. Democracy is both a logical and demonstrated abject practical failure. Mob rule.

Any service that a libertarian society desires will be provided by some enterprising entrepreneur ... or philanthropist. If someone is in need of charity, someone else will be very happy to provide charity (including medical attention). It has always been so, and government is the very least effective means of delivering ANY of these services.

You need to wake up to the REALITY that the American Republican Experiment has been broken ever since it was created with the best of intentions. Whether it was George Washington leading the army against the Pennsylvanian farmers to collect higher taxes than even the British had levied, or whether it was the bankers assassinating Abraham Lincoln because he wanted control of the currency back with the government (and attempting to assassinate Andrew Jackson for exactly the same reason; Wilson only lived because he caved in 1913). The more things change, the more they remain the same.

Have a look at the state's share of GDP over the last two centuries (ie. 10 generations and 100 congressional elections), during which time it has relentlessly increased year by year, congress by congress, until the current ridiculous breaking point. Even reducing government by 99% to get it back to where it all started ... assuming any lefty or pollie or bureaucrat would go along with it ... would just see the whole thing explode again in no time at all.

Statism is dead! Let's just give it a peaceful burial before the lawmakers, lawyers and law-funding oligarchs stink the place out again.

Fri, 10/01/2010 - 07:58 | 617799 snowball777
snowball777's picture

I can see your clinics sprouting up all over Somalia now. Your utopian idealism is well-intentioned, but extremely short-sighted and naive...such a waving of hands cannot mask the details lurking with sharp teeth behind your generalization.

To transfer faith from government to corporations does nothing but change the color of your cage and place them explicitly beyond your accountability. Small government -> powerless courts -> unenforceable contracts.

Libertarianism is fun right up until the first time you get food poisoning.


Fri, 10/01/2010 - 08:38 | 617853 i-dog
i-dog's picture

Your narrow vision is astounding. And your lack of understanding of thousands of years of successful individual action and accountability is alarming.

Corporations ARE a statist construct ... to limit liability in return for state sanction. Without the state, there is no big bully to hide behind ... simply contract, natural law, reputation, and restitution in default. It works in international trade, it works for the oligarchs in their drugs and arms dealings, and it works for the little guy on eBay. We don't need a corrupt legal system to sort out these simple issues.

Socialism is fun right up until you run out of other people's money to steal/spend.

Fri, 10/01/2010 - 08:48 | 617870 snowball777
snowball777's picture

Sadly, no, it fails in each and every one of those contexts.

Oligarchs are exactly that...anti-competitive entities with brutal enforcement of random rules (what a country!). It works in international trade for whom? Certainly not small farmers in developing countries. Anyone can game a ratings system like E-bay (but in general I like the market-making tech).

And I think none of these examples can be extracted from the context of status quo economies (no pineapples, AKs, heroin, or Lindsay Lohan panties to exchange in your world....okay maybe the heroin).

Perhaps you walk as you talk and you're ready for the implications involved in what you're proposing (much smaller economy, much slower tech advancement, etc)?

The myth of the individual is very attractive, even an ideal to which one should strive, but the interdependence of mankind is inescapable (but do try!).


Fri, 10/01/2010 - 15:52 | 619106 i.knoknot
i.knoknot's picture

i gotta go with i-dog on this one, although agreement with him does *not* discount your points!

we all agree (?) that humans and their institutions motivate towards comfort and away from discomfort.

this said, today's governments (most all of them) auditably have very little connection to their charges (and no, voting clearly does not correlate with representation, much as the MSM would want you to believe it does). because of this disconnect, and because the government does not currently fear its populace, they *naturally* move toward power and have no reason to shy from supressing perceived dissent/threats (regardless their merit - a threat is a threat).

libertarianism is about safeguarding and tempering the unbridled growth of any institution that would limit natural freedoms, rather than some mis-perceived parallel to anarchy and/or complete chaos.

i simply don't believe the safeguards are in place any longer (no accident), and we are visibly watching the beast grow out-of-bounds at an alarming rate. so fast that we may not be able to control its inevitable implosion. rather than instituting a controlled soft redirection, we get to watch it fail like the Hindenburg.

Fri, 10/01/2010 - 06:04 | 617675 Glaucus
Glaucus's picture

Quite true, if denied by the vast majority of people both here and elsewhere, having been brainwashed into believing that the state is either inherently good or "a necessary evil."  And most, of course, have been taught to believe the former.

But the fact is that, by its nature, the state cannot be limited --  Rather, because it is everywhere and always a cancer on society, it will grow beyond whatever limits society imposes on it, the grotesque failure of our vaunted attempt at federalism being no exception.

No, the state must be eradicated, period.  And fortunately, there are forces at work in the world today (this site being a perfect case in point) -- -- that signal an end to the state.  And much sooner than most would think.

Thu, 09/30/2010 - 19:24 | 617009 snowball777
snowball777's picture

First, the right wing owns TARP. Paulson? Bush? Okay, that we're in reality again.

I'd love to cut them all, but have yet to see a genuine discussion of how to maintain our current consumer-credit-oriented, outsourced service-sector-only economy without the edifices of the social safety net you've enumerated.

I'd love to see most of the people underwater now rent for years like I have and waiting to see another 20% drop in RE prices with a smile on my face knowing I'm saving thousands per month being patient, but even if you eliminated the GSEs, securitization will still allow the same shenanigans. Best of luck teasing apart the 'innovation' from the 'graft' in your Happy Valley, Ayn.

And you'll also need to foot the bill for all the non-DOD military spending on NASA, keeping the nukes safe, and the VA (you love the troops, right?); don't skip out on our finest soldiers after they've done their duty because it's better for your Pug insurance company golf buddies or anything.

Are you willing to cut them all and let go of polarization distractions like gays? The TeaPotDomeExpress isn't.

Too bad, but sometimes 'different ditch' isn't compelling enough.


Thu, 09/30/2010 - 22:35 | 617350 snowball777
snowball777's picture

There's the vote on what's to be done...and then there's the brunt of the responsibility for the crisis to which it was a response in the first place...or did all those 'nay' votes not have control of congress and the presidency for years during Dubya's Reign of Error?

Fri, 10/01/2010 - 03:48 | 617635 i.knoknot
i.knoknot's picture

you claim (above) to seeing beyond the duopoly of our current system, yet repeatedly throw barbs at particular figures as if it's a meaningful endeavor.

drop the names, and you start to see that they've *all* been duping us for decades. in aconcerted and coordinated effort. a bad dubya doesn't make a good maobama. and bad maobama doesn't make a good dubya.

if we learn anything from their crap, it's that it's time to look at tomorrow's vote, and stop being distracted by today's MSM rubbish. vote. send a check. send a letter. educate your friends.

else we're lost.

Fri, 10/01/2010 - 05:57 | 617672 snowball777
snowball777's picture

I could throw barbs at Rubin and Clinton too, if that would help, but I take your point about constructive, rather than reflexive criticism.

I'm less attached to the 'who' did 'what' than the 'how' we're going to need to fix it (e.g. replacing Glass-Steagall, electoral reform, and other progressive platform planks).

Fri, 10/01/2010 - 07:04 | 617731 nmewn
nmewn's picture

"(e.g. replacing Glass-Steagall, electoral reform, and other progressive platform planks)."

Agree on Glass-Steagall (thanks Bob Rubin you friggin nut case)...but what does electoral reform have to do with finance? It's not enough that the bankrupt blue states have the population (the popular vote) to vote to rape & pillage the rest of the nation?

I think a "progressive" platform has done enough damage already. My previous vote tally link had no impression on you apparently.

Here's some Bob Rubin from back in the day. Was Bob a "progressive"?

Now I'm off to work...someone has to pay taxes in order to give "progressives" something to micro-manage.


Fri, 10/01/2010 - 08:07 | 617809 snowball777
snowball777's picture

I mean progressive as in Feingold (anyone associated with Citi is DQ'd out of the gate).

By electoral reform I mean campaign finance law that would bust up the duopoly as it stands so that we can get some fresh ideas before the people and give them a reason to vote FOR something again (as opposed to against whatever status quo pole to which they are diametrically opposed).

Does a two-front war of choice count as "micro-management"?

My 18% effective is in that pot too, but I'd be glad to entertain the idea of shifting that tax burden to Warren or Bank of Lynching America and off of our salaries.


Fri, 10/01/2010 - 16:45 | 619289 nmewn
nmewn's picture

I have yet to find a "progressive" who is not a statist. Perhaps you can point me to one.

And Feingold is an unacceptable answer unless you can prove he actually read the bill regarding healthcare that includes over 200 new departments, 16,000 IRS new agents, a passage that says a 1099 must be issued when doing commerce with anyone in amounts over $600 etc. ad nauseum...because if he did vote for this after reading it he is worse than a "progressive".

"My 18% effective is in that pot too"

Does this include the state tax...use or "sales" tax that Wisconsin levies? Are you including federal FICA etc.?

I'm guessing not.

And if you are investing in gold...why? Don't you feel guilt about keeping some of what you have earned safe instead of consuming taxable goods for the well being of the country? ;-)

Thu, 09/30/2010 - 23:14 | 617410 SoCalBusted
SoCalBusted's picture

Wars can be terminated.  All of the programs and entitlements that you have listed have close to zero probability of being terminated.

Fri, 10/01/2010 - 08:10 | 617813 snowball777
snowball777's picture

Not without spiking unemployment and leaving the empire's dependencies vulnerable.

Thu, 09/30/2010 - 23:24 | 617423 Common_Cents22
Common_Cents22's picture

We should be allowed to at least earmark the taxes we pay to various programs of taxpayer choice.

Fri, 10/01/2010 - 01:08 | 617535 StychoKiller
StychoKiller's picture

In which case, we can dispense with Congress!

Thu, 09/30/2010 - 18:52 | 616924 RichardP
RichardP's picture

TARP was Bush's baby.

The 2nd paragraph of this link updates what has been spent and what has been paid back:

Thu, 09/30/2010 - 19:05 | 616960 Turd Ferguson
Turd Ferguson's picture

"Paid back" that's a good one. I needed a laugh!

Thu, 09/30/2010 - 20:07 | 617090 TheGoodDoctor
TheGoodDoctor's picture

More like paid back after fractional reserve banking.

Thu, 09/30/2010 - 19:57 | 617073 homersimpson
homersimpson's picture

Does it matter? Giving W for TARP is like congratulating Barack for the rise in the stock market. Either way the US taxpayer was screwed - and both Presidents used TARP to their "advantage"..

Fri, 10/01/2010 - 10:27 | 618114 andyupnorth
andyupnorth's picture

Obama and McCain both flew into Washington to tell Bush that they too approve of TARP...

They're all puppets to their masters...

Fri, 10/01/2010 - 06:53 | 617719 ISEEIT
ISEEIT's picture

The best you can do in the midst of this meltdown is pretend it isn't real? Fucking moron.

Thu, 09/30/2010 - 19:50 | 617064 aerojet
aerojet's picture

The thing is, that was an easy thing for Sam Adams to say, he was a wealthy guy with connections.  It was quite another thing for those who had farms or people who depended on them being around to join a shaky rebellion.  So it's great theater, but damn, I'm not  sure I would have gone along with it.  History shows us that a lot of what the American Revolution was really about was a lot of really rich guys who wanted to run the show instead of the crown.  I'm not sure if colonialism was that bad for the average Joe Sixpack of the day or not.  Just look at the Whiskey Rebellion and you have your answer.

Fri, 10/01/2010 - 03:02 | 617604 i.knoknot
i.knoknot's picture

the joe six-packs of the day were the same as today: relegated to taxes by the crown, or taxes by these new guys (hope/change, etc.). at least they were able to interface with the local founding government, and more important, those founding fathers generally delivered on their promises (real property ownership, local state rule, bill-of-rights stuff, etc.) for a few hundred years.

while many of the farmers really had no choice about fighting the battles and worse, the war debts they had to repay in taxes to the new government, it could be argued that the ROI was ultimately in the positive for most (the ones that lived). none of this was nearly as romantic as the 3rd-grade history lessons would have us believe.

the quote is still universally appropriate to a better human condition.

Thu, 09/30/2010 - 22:49 | 617366 Milton Waddams
Milton Waddams's picture

Another fine example demonstrating how futurists can be problematic, especially those warning of something.

Where the common man interprets the statement as a warning -- something to watch out for and protect against -- the so-called elite interpret it as advice.

"Wow I can conquer and enslave an entire nation simply by indebting it?! Sounds easy enough, let's start the conditioning process: create the image of a lifestyle that the average person covets so greatly that they, through the accumulation of debt, are willing to enslave themselves to achieve the illusion of living it."

FWIW, I've always thought that conspiracy theorists are TPTB's best friend.

"Wait one minute, this nutbag thinks we can manage the thoughts of individuals using top secret science. LET'S GET ON IT PEOPLE!!! Oh, and if this whacko doesn't know how to do it; marginalize the theory while we work on developing and implementing it."

Thu, 09/30/2010 - 18:29 | 616865 Instant Karma
Instant Karma's picture

Isn't there some law limiting the number of surreally stupid things the government can do in one day?

No but there will be a law not limiting this.

Government: Hell bent on committing economic suicide.

Thu, 09/30/2010 - 19:42 | 617045 insidious
insidious's picture

No - but there should be.

Thu, 09/30/2010 - 17:38 | 616744 Thunder Dome
Thunder Dome's picture








Thu, 09/30/2010 - 18:51 | 616918 LowProfile
LowProfile's picture

You just read my mind.



Fri, 10/01/2010 - 00:32 | 617359 RockyRacoon
RockyRacoon's picture

Speaking of shaky deposits, does anyone know of a way to get money out of a State plan?

Here is one that a friend is in and without a catastrophic event he is stuck.  It is not guaranteed by FDIC as far as I can see.  He will not retire any time soon and has been told he's locked in.   Weird to me but then I've never worked for any governmental entity.

Details on plan here:

Introduction - 'Retirement Plan Online'
Fri, 10/01/2010 - 08:58 | 617894 Bob
Bob's picture


Thu, 09/30/2010 - 17:41 | 616758 midtowng
midtowng's picture

What's next? Infinity plus one? Negative interest rates?

Thu, 09/30/2010 - 17:47 | 616774 midtowng
midtowng's picture

Could this expansion of FDIC liability have something to do with this:

The U.S. may lose about a third of its banks as the weakening economy weeds out the least healthy institutions, said John Kanas, chief executive officer of BankUnited.

Thu, 09/30/2010 - 18:47 | 616910 frankTHE COIN
frankTHE COIN's picture

Looks like they are jumping ahead of the Usain Bolt of all bank runs. Those numbers rival the busted banks totals of the Depression.

Thu, 09/30/2010 - 19:23 | 617007 Augustus
Augustus's picture

Insurance rates and liability are based upon total deposits, not number of banks.

What is interesting is that the FDIC can change the insurance rules without consulting the institutions who ultimately have to foot the bills.  I believe that the Money Market funds have been paying some insurance premium since one of the bailout bills.  I cannot keep up with the acronyms but it may have been the first evoloution of TARP.

Thu, 09/30/2010 - 17:51 | 616782 andybev01
andybev01's picture

-infinity to infinity.


Plus a free toaster.

Thu, 09/30/2010 - 18:10 | 616825 Cognitive Dissonance
Cognitive Dissonance's picture

The FDIC's Buzz Lightyear is taking them "To Infinity and Beyond".

Glad to see someone knows what they're doing at the FDIC.


Thu, 09/30/2010 - 20:39 | 617160 johngaltfla
johngaltfla's picture

Thank you C.D. for putting Buzz up there. He should be the symbol for the coming hyperinflation which will be needed to cover all this bullshit.

Fri, 10/01/2010 - 01:16 | 617539 bigkahuna
bigkahuna's picture

I suspect a USD devaluation is coming.

Fri, 10/01/2010 - 00:05 | 617482 agrotera
agrotera's picture

love it CD!

Thu, 09/30/2010 - 17:41 | 616759 mikla
mikla's picture

Two words: Nightly sweeps.

The demand deposit account (i.e., checking account) is a bank liability -- your money isn't really there.  It is a loan you make to the bank (upon which the bank pays no interest).  That's why it's a bank liability.  Hint:  Banks love it when they can borrow money from you for free.

Then, banks do "nightly sweeps" from those accounts (since the repeal of Glass-Steagall), so banks can count that as bank liquid assets.  (Banks can literally "day-trade" based on those checking account balances.)

Banks CANNOT do that with Money Markets.  Banks CAN do that with checking accounts.  Since the gubbermint has been eyeballing the money market for a couple years to try and figure out how to "lay hands" on that cash, this would do it.

Further, "I'm providing free insurance!" is always the tail end of any good ponzi.  Heck, States and municipalities all over the US are selling their "AAA" status for nickels to back-stop any stupid ponzi scheme, under the assumption that "nothing could go wrong, so we never even have to think about paying out on a liability".  Selling insurance without the expectation of ever paying claims -- FREE MONEY!  Yay!

Yes, the FDIC is broke, and extending "free" insurance to entice people into the mousetrap is the only goal here.

Thu, 09/30/2010 - 17:56 | 616788 umop episdn
umop episdn's picture

Impeccable logic, thank you. Is it any wonder the PMs keep getting more expensive in dollar terms?

Thu, 09/30/2010 - 18:58 | 616940 hayleecomet
hayleecomet's picture


I was not aware that banks could sweep checking account deposits unless the account holder agrees to such.  I have all of my cash in non-interest bearing checking accounts.  I've opted out of the .00000000001% interest rate in CD's or money markets simply because I don't want to give those MF'ers the ability to use my money to their benefit.  I'm going to have to check out your claim.




Thu, 09/30/2010 - 19:14 | 616983 mikla
mikla's picture

Here's an article from 2007 at Minyanville that talks about these sweeps originating in 1994, and the implications (e.g., no more reserve requirements):

Mish talked about it back then too (May 2007):

Of course, I always thought Banks would use this power "for good", and not "for evil".

Thu, 09/30/2010 - 21:33 | 617254 hayleecomet
hayleecomet's picture

thanks for the info and the links!!!!

Thu, 09/30/2010 - 22:17 | 617321 hedgeless_horseman
hedgeless_horseman's picture

Agreed.  Good analysis.  Thanks, Mikla. 

Thu, 09/30/2010 - 19:44 | 617050 seek
seek's picture

Spot on. What's even more interesting is that this dovetails with the end of insurance on non-bank money market funds last year. 

So... engineer a market drop, MMFs aren't insured, drive deposits to "insured" banks.

Of course a drop doesn't impact a MMF directly, but provides a great scare tactic to call into question solvency of non-bank MMFs and heard the sheep.


Thu, 09/30/2010 - 21:22 | 617241 nmewn
nmewn's picture

"The demand deposit account (i.e., checking account) is a bank liability -- your money isn't really there.  It is a loan you make to the bank (upon which the bank pays no interest)."

Ping and plus a half percent daily at least ;-)

Fri, 10/01/2010 - 03:59 | 617638 i.knoknot
i.knoknot's picture

i was led to believe that DDAs were like a safety deposit-box. guaranteed to be there, and therefore the fees for the holding and 'protection' of your deposits.

this, in contrast to both savings accounts and especially that fancy new thing called a 'NOW' account, that collected interest *and* you could write checks against it (basically savings with checks - a loan to the bank).

not-so-long-ago, a big bank (BoA?) sent letters to their DDA customers (in texas?) indicating that there were going to be 'automatic conversions' from DDA to NOWs. This re-affirmed my belief that DDAs were a thorn in the side of the banks (all that money, just friggin *sitting* there, untouchable! augh!).

i'll be asking my banker in the morning...

Fri, 10/01/2010 - 06:37 | 617698 nmewn
nmewn's picture

Mikla is dead on as usual. Any currency (in mikla's parlance, loaned) to a bank, in any liquid form, will be used by the bank for it's own purposes.

For example, I have direct deposit for my paycheck into a checking account. Wednesday it was "booked" by my company as being paid out to me. I will have access to it today (Friday). They get a free ride for two days on me by my choice of having direct deposit set up.

I'm sure there are millions of nmewn's who do this. It cut's down the chances the check will be late for paying bills or lost in the mail as like so many others the headquarters of the company is not in the state I work from.

I never had a problem with them using my money for a couple days to cover the cost of this service to me (they charge no fee's, no minimum balance requirement etc.) until Congress decided to use more of my money to pay for their (Congress & the banks) bad behavior.

So every pay day...the account get's drawn down to $20.00. It simply disappears into the ether...which must drive the small minded bean counters crazy (is what I take away from the article) they sit in their small rooms...under their small naked lightbulbs staring at their abacus...LOL.


Thu, 09/30/2010 - 17:43 | 616763 PicassoInActions
PicassoInActions's picture

useless trinkets like iPads? -- Disagree. I like my Ipad and short in AAPL

at least programms ( hardware from china) for the ipads are produced in US and some1 is doing good with that.

Thu, 09/30/2010 - 18:07 | 616816 DoctoRx
DoctoRx's picture

You took my defense of the iPad before me.  Congrats.  Except I'm long AAPL

Thu, 09/30/2010 - 18:15 | 616835 HarryWanger
HarryWanger's picture

Curious...why do you like your iPad? I've talked to many who thought it would be great for travel but now just use it as a browser while hanging out on the couch. Not picking on the iPad but it seems like many thought it would be a great tool and has turned out, to some, to be...well, a trinket. 

Thu, 09/30/2010 - 19:25 | 617010 Catullus
Catullus's picture

I'll respond.

My parents are uncool boomers from Brooklyn. They both have one. Love it. Their vision is terrible and hate sitting at the laptop when they could be watching soprano's. Read the news, respond to emails, troil goddamn facebook. It's insane. They're not buying laptops again.

Thu, 09/30/2010 - 23:38 | 617443 snowball777
snowball777's picture

Useless if you want to develop cross-platform or use Flash alright.

Thu, 09/30/2010 - 17:43 | 616764 Pillage
Pillage's picture

That virtually guarantees they won't cover a loss of 1 penny. If you can't cover anything why not say you'll cover everything. I'm buying a safe.

Thu, 09/30/2010 - 18:09 | 616822 DoctoRx
DoctoRx's picture

I keep some of our cash at home but keep plenty in a bank safe deposit area (ironic but no sarcasm).  Looked into safes but IMO the only really worthwhile one's are built into a concrete floor or something of that nature.

Thu, 09/30/2010 - 18:55 | 616931 LowProfile
LowProfile's picture

Buy two or three safes.

Keep them in various locations in your house, in typical 'hiding' places (closets, under stairs, etc.).

Fill them with scrap lead.  Old batteries are a good source.

Keep your valuables somewhere else.

Thu, 09/30/2010 - 19:01 | 616948 Pillage
Pillage's picture

That idea works really well for theft but doesn't do much for fire or flood damage.

Fri, 10/01/2010 - 11:39 | 617893 fiftybagger
fiftybagger's picture

Safe deposit boxes will be seized:


All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."

- President F.D. Roosevelt, 1933



California Unclaimed Property - Bank of America stole our money






I’m a licensed and bonded locksmith... w/ 25+ years experience.

FIRST, Every person who has access to SDB keys has the ability to copy them. 99% of these keys are nothing more than a flat piece of metal that can be duplicated by a teenage boy in the garage with nothing more than a $50 handheld rotory power tool. This means that it is possible not only for bank employees to illegally access your SDB; but also other SDB holders. HOW? Simply by renting mutiple boxes at the same bank, copying keys, then giving up all the boxes except 1 and waiting for them to be re-rented. Then going back in to get into your box; but get confused and stick your ILLEGAL KEY into someone elses box... the stupid bank employees never even look to make sure they are opening the right box; as they blindly insert there guard key and turn both to open the box for you. FOR THIS REASON, the SDB contracts are written to protect banks from any and all liability from theft of materials stored in the box. You are really taking your chances when you store anything in a SDB.

SECOND, Several times over the past year I have attempted to pull out $5K to $8K cash from three different banks that I have accounts with. In each case, the teller told me that they don’t have that kind of cash on hand. I THEN DEMAND TO TALK TO THE BANK MANAGER. I inform the manager that I’m going to a national industrial trade show (true statement) and need the cash to buy used tools and machines from peers. Checks and Credit Cards don’t do you any good at these shows where CASH-N-CARRY is the motto of the day! Everytime, the manager told the teller to give me the cash... and magically the teller had enough cash on hand for my withdrawl.

THIRD, As a business owner I have a merchant accout with MASTERCARD/VISA. Each month the banking fees total 4% to 5% of my net credit card sales. My guess is that the banks have plenty of cash on hand, but don’t want much of it in circulation because they want to earn fees on as many consumer transactions as possible. Let’s face it, if you spend $1000 each month on your debit card; the banking system can earn $10 to $50 in fee income off the merchants you do business with. [Of course, you are really paying these fees in the form of higher prices]. If the bank lets you (or makes it easy for you) to take your money out in the form of CASH and spend it, they lose that fee income.

FOURTH, I asked a manager at FIFTH/THIRD BANK in Ohio, if my accts were FDIC insured. Before he gave me a direct answer, he told me that the gov’t pushed the FDIC thing way too much. He then said that If FIFTH/THIRD BANK (a small regional bank) were to go under, it would bankrupt the FDIC. He then said that the Gov’t might step in and bailout the FDIC but if they did it could take 7 or more years for me to get back the $23K that I had in a savings acct with them at the time.

FIFTH, The subprime mess is infecting almost all the banks, money market funds, pension funds, and major bank failures at anytime in the next 6 months are very likely. I have never in the past been afraid to keep money in an FDIC insured account. Today, I am very afraid!!! I opened up an account in Ireland and wired the bulk of my savings offshore. They were able to give me a debit card attached to my savings acct, so I can still access my money anywhere in the world at anytime (of course they do charge fees for this).

************************ * WAKE-UP CALL * ************************

The last thing I have to say is really a message for any BANKER, or GOVERNMENT OFFICIAL who reads this post. As I LOCKSMITH, I secure businesses and homes for people. All I have is my integerity--- for people must trust me not to make duplicate copies of their keys and then come back and rip them off!!! If I or any locksmith were to betray the public’s trust on this issue, we would be out of buisness OVERNIGHT!

The U.S. GOVERNMENT has failed to prevent the WALL-STREET scam artists (bankers, brokers, ratings-agencies) from destroying the integerity of the American Financial System. As a result the world is about to put the UNITED STATES out of business OVERNIGHT. (Its just that overnight in this case is going to take a several months to a few years — due to the complexity involved in untangeling national economies) CHINA and many other countries have already started to dump the U.S. dollar and USD assets as the first step in this process.

ITS TIME TO CLEAN HOUSE! The U.S. Government must clean up the markets and restore integerity to the financial system or the end game is going to be WWIII.

Thu, 09/30/2010 - 17:43 | 616766 plocequ1
plocequ1's picture

Thanks Tyler. I was getting worried about my $53.86 I have stashed away in my savings account. I'm so relieved it's insured.

Thu, 09/30/2010 - 17:49 | 616776 Rainman
Rainman's picture savings accounts pay less than a quarter percent and now the sheep are being encouraged to give it up totally free.....for " insurance ". Who the hell keeps $ 250k in a non-interest checking account ??

The mattress just became a more attractive repository.

I hear ya', Grandma !! Your wisdom lives on.

Thu, 09/30/2010 - 17:49 | 616777 Ripped Chunk
Ripped Chunk's picture

Hmmmmmmm, they be fearin' a bank run?

Fuck all TBTF's There are other banks with equal services.

Thu, 09/30/2010 - 17:59 | 616797 DoChenRollingBearing
DoChenRollingBearing's picture

I've read Bank of America (Jim Willie and others) might have been on the brink of failure recently.

Thu, 09/30/2010 - 17:57 | 616793 outamyeffinway
outamyeffinway's picture

The trap is nearly set!!!!

Thu, 09/30/2010 - 17:59 | 616796 papaswamp
papaswamp's picture

Actually I find this distubing for a different reason...tin foil hats on kids...

We have seen the exodus of several key White House economic advisors. Mortgage banking fraud is breaking out all over and information of insider Fed info is being 'sold' is hitting the wires. What if the forward view isn't just bad...but really fucking bad. First thing one would do....start trying to put into place mechanizims to prevent banking panic and run on deposits. This makes me think some huge black swan is coming, and those in the 'know' have a prety good idea of when and how bad.

Ok back to my Knob Creek...

Thu, 09/30/2010 - 18:16 | 616837 Kali
Kali's picture

You are absolutely right.  This also explains why, in the last few weeks, I have been receiving junk mail from WF, Chase, US bank and others that they will "give" me $100 to open a checking account with them.  I was disturbed that my former credit union that I dumped was doing the same.  Dumped my former CU when they were pushing GS bonds at 5% to "help invest your money" for good returns.  There is an enormous black swan on the horizon, the stench of desperation from banks, the Fed, the gov is overwhelming.  If you have your "money" in banks, 401ks, pensions, stocks, any freaking thing that has anything to do with any of these crack whore pimps, get it out NOW!  It's all coming down real soon.  I think they have totally lost control and are doubting their ability to keep things together until the election.  BIG SIGN=R Emmanuel leaving to become Mayor of Chicago.  The rats are all jumping ship and trying to establish their feudal states now.  Good luck everyone.

Thu, 09/30/2010 - 19:04 | 616959 hayleecomet
hayleecomet's picture

no tin foil, papa.  you nailed it.  we've all been waiting for the bank runs and IMO they know what lies ahead.  it's a joke that's not very funny because of the printing press.


Let's get this over with. 

Thu, 09/30/2010 - 19:18 | 616991 Conrad Murray
Conrad Murray's picture

The commie rally in Washington on Saturday is another sign to me.  People all around the world (riots in Europe, coup in Ecuador, Japan/China) are being pushed towards something decidedly ugly.  We may very well be on the door steps of the next great war, because you know, war solves shit like this.

Thu, 09/30/2010 - 19:33 | 617028 Augustus
Augustus's picture

I don't know what you consider ugly.  however, it is obvious that the ponzi game is comming to an end.  reality may be less comfortable than getting food and shelter from someone else's paycheck.

Thu, 09/30/2010 - 21:17 | 617234 samsara
samsara's picture


Take a look at my post on the FDIC not being able to find buyers anymore for the failed banks.  They(we) are going to absorb them.


Thu, 09/30/2010 - 18:02 | 616805 Cognitive Dissonance
Cognitive Dissonance's picture

Hey, its all good. This is just Mary's rule. If you're in for a penny, you should be in for a pound......of citizen flesh.

No problem. Where do I send my bloody mess?

Thu, 09/30/2010 - 18:03 | 616806 whwood75
whwood75's picture

PZ (permanent zero) here we come.

Thu, 09/30/2010 - 18:09 | 616821 Duuude
Duuude's picture









It's for the banks balance sheets.




Thu, 09/30/2010 - 20:12 | 617093 Spalding_Smailes
Spalding_Smailes's picture


"The cost of the financial bailout, originally projected to be in the hundreds of billions, is now expected to be less than $50 billion" the White House said Thursday.

President Barack Obama ~ 2010



"The federal government must and shall quit this business of relief. I am not willing that the vitality of our people be further stopped by the giving of cash, of market baskets, of a few bits of weekly work cutting grass, raking leaves, or picking up papers in the public parks."

Franklin D. Roosevelt ~ 1935

Thu, 09/30/2010 - 20:28 | 617129 tip e. canoe
tip e. canoe's picture

is today's TARP victory lap another clue perhaps?

priming the pump for another trip to the trough?

Thu, 09/30/2010 - 18:11 | 616828 Pillage
Pillage's picture

For anyone interrested:

Your bank is required to file a currency transaction report with the government for every deposit, withdrawal or exchange over $10,000 in cash.

Not only that, but if a bank "knows, suspects, or has reason to suspect" that a transaction involving at least $5,000 is "suspicious", then another report must be filled out. This second type of report is known as a suspicious activity report, and it is also filed with the government.

Thu, 09/30/2010 - 18:18 | 616847 gwar5
gwar5's picture

To avoid suspicion, I always wear a hat, dark glasses, and try to disguise my voice.

Thu, 09/30/2010 - 18:24 | 616853 Pillage
Pillage's picture

Been banking with JPM for 20 years and they still put a hold on my cashier's checks. I guarantee if I withdraw $5000 it will be suspicious activity.

Thu, 09/30/2010 - 20:19 | 617107 tip e. canoe
tip e. canoe's picture

"Been banking with JPM for 20 years"

and there's your mistake

Thu, 09/30/2010 - 22:54 | 617372 RockyRacoon
RockyRacoon's picture

Been banking with JPM for 20 years

You're kidding, right?  After all this and you are still there?

Thu, 09/30/2010 - 20:05 | 617086 knukles
knukles's picture

What if some highly unstable person starts writing bazillions of ittiy bitty teenie tinie checks to cash and do them all at once every single day and as they're cashing their own checks to cash tells the cashier that they think they're really fucking suspicious and then every single godddmaned day about 20 extra reports'll get made to Treasury and after about a year that'll be 4400 reports of suspicious activity from that one terribly disturbed individual alone, and what with all the crazies out there starting to do the same thing it'll be way past just OK normal with the reports.  Especially if everyone asks for a copy to keep for their records.

Thu, 09/30/2010 - 18:26 | 616859 Sokhmate
Sokhmate's picture

what if you cash your checks at a check-cashing store to bypass the banks completely? (a very serious question)

Thu, 09/30/2010 - 18:37 | 616885 papaswamp
papaswamp's picture

Check cashing stores typically charge a percentage and will only cash small sized checks. Not always, but usually.

Thu, 09/30/2010 - 18:40 | 616894 Sokhmate
Sokhmate's picture

Do you know of any reporting requirements they have to comply with? Assume the check they cash is  close to the limit reported above by Pillage, or even above.

Fri, 10/01/2010 - 06:05 | 617676 snowball777
snowball777's picture

Plus, who wants to walk around the worst hoods (where check cashing places reign) with a backpack full of Benjamins?


Fri, 10/01/2010 - 09:13 | 617925 Bob
Bob's picture

You haven't noticed the proliferation of new check cashing/payday advance mills in middle class neighborhoods?

Exploding credit default means, for most, the loss of their overdrawn and unpayable checking accounts . . . and the inability to open a new one virtually anywhere. 

It's not just the poor anymore. 

Thu, 09/30/2010 - 18:15 | 616836 gwar5
gwar5's picture

To Infinity and Beyooooond!!

Perhaps Sheila Bair is just giving us a heads up on the what inflation is going to look like in the near future.


Thu, 09/30/2010 - 18:17 | 616843 HarryWanger
HarryWanger's picture

Lots of shit going on with the banks right now and it's beginning to hit MSM. FDIC just wants to keep people calm in case they happen to see a ticker telling them the banks are in trouble again at the bottom of their screens while watching Dancing with the Stars.

Thu, 09/30/2010 - 18:31 | 616874 NoVolumeMeltup
NoVolumeMeltup's picture

At the risk of not ignoring you, are you still a troll? (albeit one with a different tune than your DR days)

Thu, 09/30/2010 - 19:00 | 616943 Calculated_Risk
Calculated_Risk's picture

The same day(s) citi had their trouble with their online access, a friend of mine came over and said the local credit union couldn't open an account for him... because the computers were down...  and I'm sure I read someone on here posted something similar in another state. add flash crashes.. and whatnot. Sounds to me like the foundation of sand is washing away.

Thu, 09/30/2010 - 19:10 | 616978 Spalding_Smailes
Spalding_Smailes's picture

Was not aware of this but I was at my bank a few days ago and wanted to transfer funds of my card into my savings. They told me the system was down. They have 15 branches in Illinois ... yikes ...

Thu, 09/30/2010 - 18:18 | 616844 snowball777
snowball777's picture

Perhaps the FDIC would like the reserve levels of the banks to keep them up at night less often?

i.e. this is less about consumer prodding than Tier 1 caps.

Thu, 09/30/2010 - 18:27 | 616850 mynhair
mynhair's picture

Funny, just Mon, one o'my banks called to try and get me out of my checking acct.

"Are you comfortable with that much there?"

"Yes", I said, and "thanks for going bust.  I've been calling for it for 12 months."

Slowly pulling it out, as stated above, large transactions are flagged.

Happy FDIC Friday tomorrow!

Thu, 09/30/2010 - 18:22 | 616852 belogical
belogical's picture

I am probable wrong, but the first thought that came to my mind was a large sell off is in the offering. The banks are getting wobbly and the gov't doesn't want people running scared. There's a huge short out there, but the timing is going to be a b*tch.

Thu, 09/30/2010 - 20:16 | 617105 TheGoodDoctor
TheGoodDoctor's picture

Interesting. Did the "breaking the buck" happen before or after the multi month crash? I can't recall.

Thu, 09/30/2010 - 20:38 | 617158 Kali
Kali's picture

good question.  I can't remember either. Anyone?

Thu, 09/30/2010 - 21:52 | 617284 frankTHE COIN
frankTHE COIN's picture

I believe Lehman went out Sept. 15, 2008

FDIC went from $ 100,000 to $ 250,000 Sept 18th.

Money mkt guaranteed on Sept 19th. ( the buck broke shortly before )

Thu, 09/30/2010 - 18:25 | 616856 Quantum Nucleonics
Quantum Nucleonics's picture

So the FDIC provides insurance for a fee to the bank to insure the first $250K of my deposit.  They provide insurance for free from $250K to whatever.

Relating that to the real world, if I were to call my home insurance guy and tell him that I'd like to up my coverage to whatever and that ought to be free???

Are these people in DC now completely detached from reality???

Thu, 09/30/2010 - 18:30 | 616864 mynhair
mynhair's picture

Are these people in DC now completely detached from reality???

Well, duh!

Thu, 09/30/2010 - 19:09 | 616976 IrrationalMan
IrrationalMan's picture

now?  i think they always have


Fri, 10/01/2010 - 00:14 | 617494 SoCalBusted
SoCalBusted's picture

Yea, and tell him you want zero deductable!

Thu, 09/30/2010 - 18:30 | 616869 Buttcathead
Buttcathead's picture

I dont care if they give me a free toaster.  I aint buy'n nuttin. And I aint put'n no money in a Zombie Ponzi Banksters account.  they all can kiss my black mule.

Thu, 09/30/2010 - 20:41 | 617163 Kali
Kali's picture

Ya know, I can't help but love you Buttcathead.  Ive always loved cats.  All cats.  Lions, jaguars (my fave), Cougar W,  domestics, now, Buttcatheads. 

Thu, 09/30/2010 - 18:45 | 616905 Quinvarius
Quinvarius's picture

This is a first step to doing some serious bank failings, IMO.  Some of these companies are insolvent regardless of whether or not they have ticker symbols on the NYSE.  As long as my money is safe, I say take out the garbage.

Thu, 09/30/2010 - 19:17 | 616990 thesapein
thesapein's picture

I think you missed the first several acts of this comedy of errors. An increasing number of banks have already been failing over the last two years, devastating the FDIC. That's why this is so funny. They can't cover what's one their books currently, how they gonna insure an infinite amount more? 

Thu, 09/30/2010 - 18:51 | 616919 -Michelle-
-Michelle-'s picture

Time to pull out more cash.

Thu, 09/30/2010 - 18:58 | 616938 Hephasteus
Hephasteus's picture

LOL. That's pretty much what I was thinking.

I wonder what kind of business/economic environment these people will eventually create.

Thu, 09/30/2010 - 18:57 | 616937 Hooter Shaker
Hooter Shaker's picture

I tried to withdraw 8k cash from my bank a few weeks ago and they told me they didn't have it.  I settled for 4k and had to go back the next week to get the other 4k.

I hate to admit it, but I'm spooked.  I'm getting the rest out of there ASAP.

Thu, 09/30/2010 - 19:07 | 616964 thesapein
thesapein's picture

Same goes for depositing fat checks but in reverse. They'll often cash the check in increments, crying about verification as if it really took two weeks in this instant check digital age. I once got a lot of heat for breaking the checks up myself so that they'd clear sooner. My account was locked for suspicious activity for about the same period had I done it the other way.

Thu, 09/30/2010 - 19:01 | 616945 dredward
dredward's picture

They missed it by ten days?  Don't they know its 12/21/12 that the SHTF?

All good, all will be already decided by then.

Happy to be a part of ZH, thankful for the truth!!

Dr T.Ruth

Thu, 09/30/2010 - 19:01 | 616949 thesapein
thesapein's picture

Best laugh all day for me. Thanks ZH. In my naivety, I thought the FDIC was done for 6 months ago. Going for broke, I guess.

Thu, 09/30/2010 - 19:01 | 616950 Atomizer
Atomizer's picture

Basel III: The Global Banks at The Edge of The Precipice. Trillions of "Toxic Waste" in the Global Banking System

Thu, 09/30/2010 - 19:03 | 616955 Cecil Rhodes
Cecil Rhodes's picture

Chair Bair (hehe) spoke at my graduation.  Her crooning was brief and the gist was "Go now and join your recently graduated friends from the last 3 years...into your parents basement!  (laughter)  Seriously though, Gen Y for the win."

Thu, 09/30/2010 - 19:08 | 616966 Turd Ferguson
Turd Ferguson's picture

Most of all, I find the timing of this announcement to be quite interesting.

Why now? The limits were raised to $250M at the height of the crisis in 2008. Is there a "shadow" crisis happening behind the scenes as we sleep?

Thu, 09/30/2010 - 19:23 | 617006 thesapein
thesapein's picture

lol, yeah, are they going all in, so to speak, while completely bluffing? This bluff will be called. But, yeah, why not double the amount so it looks more believable? Are the times getting that desperate? 

Thu, 09/30/2010 - 19:41 | 617039 frankTHE COIN
frankTHE COIN's picture

You truly have to ask, what is it that they see ?

Thu, 09/30/2010 - 19:08 | 616969 TGracchus
TGracchus's picture

I don't think it's to make it easier for people to spend by encouraging them to take their funds out of MMs.  How many people in this country are going to have more than $250k in combined checking and MM?  IDK but it seems it wouldn't be enough to make any difference in "priming the pump." 

Tend to agree with harrywanger that its a psyop to create the illusion of bank safety to calm a jittery public. Either that or the FDIC knows hyperinflation is coming and they're hoping to forestall bank runs by people trying to pull all of Zimbabwe Ben's trillion dollar bills out at once.


Thu, 09/30/2010 - 22:39 | 617355 hedgeless_horseman
hedgeless_horseman's picture

Princess Bair:  How long before you can make the jump to hyper inflation?

Ben Solo:  Without precise calculations we could fly right through the recovery or bounce too close to a depression and that'd end your trip real quick, wouldn't it? 

Obama One-n Done-e What's that flashing?

Ben Solo: We're losing our reserve currency shield. Go strap yourself in, I'm going to make the jump to hyper inflation.

Fri, 10/01/2010 - 01:29 | 617550 StychoKiller
StychoKiller's picture

Emperor Shadukhar IV (Dune):  "Bring in that floating fat man, Larry Summers!"

Fri, 10/01/2010 - 01:42 | 617558 unununium
unununium's picture

I feel a great disturbance in the finance.  As if billions of digits cried out in terror, and then, after the election, were suddenly joined by two more zeros at the end.

Fri, 10/01/2010 - 02:42 | 617590 bigkahuna
bigkahuna's picture

han-equity trader: but I sold my stock

lando-bernake: they arrived right before you-I had no choice

darth bankster: we would be honored, if you would join us... in eternal debt

Thu, 09/30/2010 - 19:15 | 616984 davidsmith
davidsmith's picture

It's a prelude to U.S. control over those accounts.  They'll Federalize them.  They gave you to guarantee, now you give them control: limits on withdrawals, no runs, etc.  They're just following the money.  It went into money market accounts, but now people are getting out of those.  However, they are guaranteed, too. 


So watch out!

Thu, 09/30/2010 - 19:28 | 617019 thesapein
thesapein's picture

But there's no necessary correlation between amount insured and amount of regulatory control, is there? Once they've insured some amount, they've already got the control.

lol, maybe they're just adjusting for inflation!

Thu, 09/30/2010 - 19:26 | 617015 bigdumbnugly
bigdumbnugly's picture

nothin from nothin leaves nothin.


if we get to that point the dollars the fdic backs it with will be almost worthless anyway.

Thu, 09/30/2010 - 19:31 | 617023 pamriallc
pamriallc's picture

when FDIC has the unlimited credit card, and the FED has the mandate for price stability, that means that they'll print until we have price stability.  unless you're desirous of 75% off all prices you can thank the authorities for their zealous behavior.  as citizens of this great country, we have always "self insured" at the ragged edge of anything.  the fact that taxpayers are on the hook, and that we effectively ELECTED the people in office that have brought us through this crisis---- frankly thjis is the epitome of capitalism and democrasy in motion.  the US passport is good anywhere in the world.  reccomend that some people in these forums use that God given right to move elsewhere, or be part of the solution.   you could begin by investing in the solution.  we have the tools.    shawn mesaros, pamria, llc

Thu, 09/30/2010 - 23:49 | 617459 snowball777
snowball777's picture

Dear Fed plant, fuck you. You've washed your hands of your monetary duties in exchange for helping assholes who should have known better (because plenty of people were fucking warning them) cover up their tragic investment mistakes. You've pissed on your duty to maintain employment while sucking off the very vipers who created this mess. Only lobbyists and electioneers need heed your whining about who elected whom as well...we've had no voice in sold-out, gerrymandered politics for decades.

I suggest you exercise your own visa abroad...while you're still able, motherfucker.

Fri, 10/01/2010 - 02:51 | 617597 bigkahuna
bigkahuna's picture


Thu, 09/30/2010 - 19:46 | 617055 bankonzhongguo
bankonzhongguo's picture

This may be a plan to overall justify charging higher insurance rates to the banks.  Generally, lets think about the banking system and how a choosen few are TBTF and hence to be overseen by the Fed without the interferance of the OCC and the States.  By making this unlimted cover on all deposits, the FDIC is simply going the route of Fannie.  Is this a method to otherwise put down the smaller regional banks?  Any bank presidents or state banking commissioners in the house?  It seems to me that the flow of capitial, like oil, is at stake here and only a choosen few will be left standing on the taxpayers' back.  All others ...

All this and the M2 movements?

Thu, 09/30/2010 - 20:23 | 617114 Perseid.Rocks
Perseid.Rocks's picture

I've heard shadow-banking is collapsing... that was what replaced real banking when the numbers got too large.

Thu, 09/30/2010 - 20:26 | 617123 TheGoodDoctor
TheGoodDoctor's picture

I thought the reason the buck was broke was due to foreigners pulling their money from money market accounts. Could this be a tip of the hat to them as to get out of money market accounts in advance?

Could there be something more sinister on the horizon? Martial law during elections? False flag attack? Hmmm.

Thu, 09/30/2010 - 20:35 | 617150 Wags
Wags's picture

So the FDIC which is technically insolvent is going to offer unlimited insurnace on non interest banking accounts for free?

It means the USA Taxpayers, you and me, are going to back stop to infinity?

Something very strange is going on.


Thu, 09/30/2010 - 20:36 | 617154 packman
packman's picture

Sounds to me like someone's standing over a broken stretch of train trestle, and having an "oh..... s*****...." moment as they hear a whistle in the distance...


Fri, 10/01/2010 - 01:33 | 617553 StychoKiller
StychoKiller's picture

Homer:  "Normally, I'm not a praying man, but if you're up there, please save me Superman!"

Thu, 09/30/2010 - 20:45 | 617168 prophet
prophet's picture

Money market funds are dysfunctional given the current ZIRP and credit market conditions.  They also cost the provider and are not profitable.  I think they are going away.  Creating a safe landing place for that cash inside the banking system is a wise precautionary move.  WTSHTF the SIPC won't be able to pay either.  Hopefully, Lloyds will make good. 


Thu, 09/30/2010 - 20:47 | 617174 SteveNYC
SteveNYC's picture

FUCK THEM. Zero interest in electronic digits in an insolvent institution vs. zero interest in physical cash form.

Taken from the gold bugs: Physical or bust!

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