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View Diary: Explosive Bloomberg Editorial: Bank Profits are "almost entirely" Taxpayer Money (125 comments)

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  •  Good Point Pluto: They have 38 Billion (2+ / 0-)
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    trevzb, Pluto

    Covering trillions of deposits. When Sheila Bair was President of the FDIC and no friend of Geithner, the FDIC was in the red. The reason? The Banks had not paid into the fund from 1996-2006. Bair convinced congress to force the banks to start paying back into the insurance fund.

    At the time the Banks "lobbied" congress to stop that payments the FDIC had 52 Billion in it's account. When the FDIC went into the RED, it stated that it would borrow 500 Billion from the treasury.  Then the GOP got the house and that 500 Billion dollar prop was no longer taken seriously as the Treasury would have to borrow 500 Billion. But it worked well with the low info people on finance .

    The problem was the FDIC could only afford to take-over small banks. Once they took over Indy Mac, that pretty much set the FDIC back on it's heels.

    Today the FDIC is in the Black but nowhere near covering the deposits of a single TBTF bank. This dovetails neatly  with the Quantitative Easing (QE111) of 85 Billion a month...up to 1 Trillion by the Fed. If the banks were forced into buying back mortgages that were defective they would have had to use depositors money to do it. They have been lying on their financials for so long by depending on the Fed for liquidity to help buttress the BS Financials, no one has any real idea how how deep the hole is.

    One analyst complained that they didn't have a Plug number for fraud so they could issue target prices for the stocks. You have to laugh. Can you imagine that in quarter end CC? "Yes, Thank -You Mr. Dimon, could you venture a guess, just a guess on how much you cooked the books so we have a better idea of how to value the banks - with the 'fortress balance sheet'?"

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