The FDIC reports very bad news.
The Federal Deposit Insurance Corporation had its insurance fund plunge, from insuring $4.8 trillion worth of deposits, to only $10.4 billion… Are you nervous yet?
It seems Sheila Bair has a lot more borrowing to ask from Tim Geithner’s office. We’re still not seeing signs of market bottoms (although some are too excited to report an opposite opinion about this). We’re sensing an even weaker performance by the country’s top banks next year… More aggressive home lending? We’re not sure about that… Tighter rules in mortgages? That’s more probable.
No wonder Bair decided to reorganize the rules governing private equity firms last week.
Fortune Magazine’s Colin Barr is more pessimistic than we are. He writes, “… The problem bank list is just about the only part of the industry that’s growing right now. The sector’s financial problems, outlined by regulators in excruciating detail on Thursday, could speed a shakeout that already has slashed banks’ ranks by almost half over two decades.”
To be honest, we’re not sure if America is ready to handle the FDIC going bust.