If My Bank Collapses, How Long Before The FDIC Pays Up?

If My Bank Collapses, How Long Before The FDIC Pays Up?

The Consumerist
5:58 PM on Tue Jul 29 2008
By Ben Popken
12,314 views
24 comments

http://consumerist.com/5030701/if-my-bank-collapses-how-long-before-the-fdic-pays-up

If your FDIC-insured bank implodes, how long does it take for the FDIC to start paying depositors? Ever since IndyMac imploded, the question has no doubt been on many people's minds. One reader emailed me saying that he had asked the his banker about how long it might take. Allegedly, the banker squirmed around before finally saying that the FDIC had 20 years to pay people back. This is not true.

In reality, there is no statutory "upper limit" for when they have to pay you back by. Instead, the Federal Deposit Insurance Act states that the FDIC is required to pay insured depositors "as soon as possible."

Does Wall Street come apart next week?

Does Wall Street come apart next week?
by Stranded Wind
Sun Jul 27, 2008

http://www.dailykos.com/story/2008/7/27/43457/2825/714/557629

The triggering event for the run on the monoline bond insurers could not come from within the United States; the Federal Reserve, the U.S. Treasury, the Congress, and the White House have all shown a willingness to do whatever was necessary to head off this day of reckoning. It was always obvious the trigger for the meltdown would come from a "mark to market" occurring outside the control of these entities.

National Australia Bank’s decision to value the CDOs it holds at 10% of their face value (this is what got me started on this diary) may very well be the event that will trigger the destruction of the monoline insurers, the revaluing of CDOs from their "mark to model" to "mark to market". If you prefer to be more direct you can call it "mark to meltdown".

These synthetic securities or derivatives (Just call ‘em funny money) were valued via computer models that purported to express the percentage of debtors who’d fail to pay. No one actually sold these things in the open market, they just bought and held them, taking the payments that came and trusting the investment banks that were bundling up and selling these things. Financial innovation, they called it. This was true until two Bear Stearns funds imploded fifty four weeks ago.

Bankers were terrified that this would trigger an overall "mark to market" event.

NAB will shock Wall Street

NAB will shock Wall Street
Business Spectator
Robert Gottliebsen
25 Jul 2008

http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a "meltdown".

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans - an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

Bond insurers are under attack

Bond insurers are under attack
Jul 26th 2007
From The Economist print edition

http://www.economist.com/finance/displaystory.cfm?story_id=9552987

The two largest monolines, MBIA and Ambac, both started out in the 1970s as insurers of municipal bonds. In recent years, much of their growth has come in structured products, such as asset-backed bonds and the now infamous collateralised debt obligations (CDOs). The total outstanding amount of paper insured by monolines reached $3.3 trillion last year.

Two new dead banks, 2,200 more coming, FDIC bailout

Two new dead banks, 2,200 more coming, FDIC bailout
by Stranded Wind
Sat Jul 26, 2008 at 05:45:02 AM PDT

http://www.dailykos.com/story/2008/7/26/8327/37155/49/557261

I called the death of Indymac Bancorp on Monday, July 7th. The Federal Deposit Insurance Corporation seized Indymac on Friday, July 11th.

The FDIC says there are 90 more troubled banks out of the 8,500 they insure, but other sources say it’s more like 850 facing certain doom and another 1,200 to 1,300 that are likely to get sucked under

Two more of the walking wounded got picked up Friday after close of business, I learned of this via a note from Ed over at Credit Writedowns, who beat the mighty Bank Implode-O-Meter to the punch on this one.

Like Bear Stearns, like Fannie Mae and Freddie Mac, the FDIC is about to get attached to the U.S. Treasury in a way that will be pitched as a benefit for the common man, but it’s totally Welfare for Wall Street.

Bank Failures: What Do They Mean To The Average American?

Bank Failures: What Do They Mean To The Average American?
Posted on July 20th, 2008
by Sharon Secor in All News, Business News, Economic News

http://www.bloggernews.net/116806

Bank failures and bank runs are phrases that hearken back to the era of the Great Depression, during which there was more than 9,000 bank failures, with – according to some historians – depositors losing $140 billion by 1933. While the banking system has evolved and changed since that era, the fact remains that bank failures still do affect the average American. Experts expect that the recent failure of IndyMac, the second largest bank failure in history, will be followed by more bank failures and not just failures of small, regional banks lower on the financial services food chain. Therefore, understanding how bank failures can affect you and your finances is important and timely.