Busted: Bankers and The Global Economy

August 2, 2008

July 26, 2008

More U.S. Banks Close Amid Pain

Friday at the last moment seems to be an FDIC favorite process for dealing with bankrupt financial and banking institutions. The Federal Reserve filed an order for First National Holding Company of Scottsdale, Arizona to cease and desist their actions, while providing certain documentation to the Federal Reserve Board.

The FDIC closed First National Bank of Nevada and First Heritage Bank. The FDIC moved quickly before the situation at the banks became worse, stating that the takeover of the failed banks was the least costly resolution and all depositors, including those with funds in excess of FDIC insurance limits, will switch to Mutual of Omaha with “the full amount of their deposits.” The FDIC has made certain that account holders have full access to their funds with the ability to write checks and make ATM transactions.

Local authorities have warned against the “need” for a bank run as (more…)

June 4, 2008

Brokered Deposits Grow as Bane to Banking

Finance Committee Leader and Senator Charles Schumer urged the Federal Deposit Insurance Corporation to consider assessing higher premiums on banks using deposits gathered by third parties such as securities firms and individual brokers who then sell interests in them to investors.

“These ‘hot money’ deposits have fueled a spate of recent bank failures that has left the deposit insurance fund on the hook for hundreds of millions of dollars.” Time and time again, we have seen that Wall Street cannot be trusted. The collateral damage to the U.S. economy is far and wide while bad investments threaten more damage in the name of greed and profits.

At the end of March, there were almost 8,500 banks and thrifts with more than $7 trillion in domestic deposits, but $4.4 trillion are estimated to be insured. What does this mean? A huge chunk of deposits actually were created by Wall Street third-parties and are technically subject to lack of coverage by the FDIC, putting more pressure on the FDIC and governmental planning for bank failure coverage.

As a result, the FDIC has a real problem that could strike at the heart of consumer confidence as banks continue to fail. The bottom line is that covering risky brokered deposits is subject to put additional strain on government monies and the national debt in the name of FDIC consumer protection. The economic news where banks are concerned just keeps getting worse.

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