Actually, they were broke as far back as August 14th of this year.
According to news wire services this morning, via Karl Denninger of Market Ticker, the FDIC is flat broke.
This is the organization that insures the bank accounts of multi-millions of Americans.
By mybudget360
This figure is stunning because the deposit insurance fund (DIF) is insolvent. We are trusting banks with no insurance fund to guard $9 trillion in our deposits.
If Americans would stop and think of the implication of having an insurance fund with no money backing up $9 trillion in their deposits, they would probably pause for a few minutes. And just because your money is sitting in a bank account doesn’t mean that it is safe. The U.S. Treasury and Federal Reserve is on a war path to devalue the dollar so even though your money is nominally the same, in real terms you have gotten a lot poorer. The dollar has fallen by over 15 percent since March. This is an enormous amount but given the policies we are following, it is no surprise.
If it can’t make it with trillions in bailouts, what will the government do to backstop the entire system?
By: Karl Denninger Tuesday, November 24, 2009
Yes, really.
Off the wire this morning: FDIC Deposit fund had negative $8.2B balance in Q3
That's broke. Bankrupt. Kaput. Gone. Poof. Dead. Rotting. A corpse.
I am not, by the way, predicting an actual FDIC failure to pay. Should such an event happen it would be tantamount to a declaration of revolutionary war (by the government about to be deposed!) as if there is one thing that would cause Granny to reach for her shotgun, it would be getting screwed out of her life savings after Sheila Bair and everyone else in our government has trotted out how their money is "fully safe" and that "nobody has ever lost a penny of insured deposits and never will" for more than 20 years, including lots of pronouncements of exactly that mantra over the last year.
Nonetheless this outlines the underlying problem the FDIC has - it has willfully and intentionally ignored the fact that banks have mismarked their "assets" to overstate their values, it has refused to demand that accounting be done on a strict "mark to market
" basis by bank examiners, and indeed, it has backed the "extend and pretend" commercial real estate "rollover" provisions of recent months, all of which is manifestly unsound and intentionally misleading.
" basis by bank examiners, and indeed, it has backed the "extend and pretend" commercial real estate "rollover" provisions of recent months, all of which is manifestly unsound and intentionally misleading. The result?
THE FDIC IS BROKE.
The kicker here is that the WORLD BANK is broke too or will be in about 12 months.
Let's put this in common-man terms:
YOUR SO-CALLED "DEPOSIT INSURANCE" AND THE SEVERAL TRILLION IN CITIZEN BANK DEPOSITS ARE BACKED BY THE SAME AMOUNT OF CAPITAL THAT AIG HAD TO BACK THEIR CREDIT DEFAULT SWAPS: BUPKIS.
Read all about it HERE and HERE and HERE and HERE.
Read more HERE. If you dare.
