FDIC Troubled Bank List Now 305

Submitted By Trader Mark
Every quarter when I post this I get the question of "where are the names of the troubled banks" so let me preface this post by saying - the names are not disclosed. That is on purpose. The FDIC does not want you to run to banks on their list and withdraw money because that is how a troubled bank seals its fate.

Second, let us be clear - without the US taxpayer supporting their operations Bank of America (BAC) and Citigroup (C) would of been farther along than "troubled". The fact that these 2 NEVER made the list despite hundreds of billions of government support among the two tells you all you need to know about this list.

Last year [Aug 26, 2008: FDIC Troubled Bank List] I was making the same point with Washington Mutual (WM) - the nation's largest savings and loan. It was NOT on the list but we had to do an emergency intervention to sell it to JP Morgan (JPM) in a backdoor deal. But folks, it was never "troubled" according to this list.

Wachovia ? Which we had to deliver to Wells Fargo (WFC) to "save it"? Never on the list [Nov 25, 2008: FDIC Troubled Bank List Grows 46% - Is Your Bank Safe?]

So as these numbers grow [Feb 26, 2009: FDIC Troubled Bank List Up to 252] , and do not include the "most connected" banks i.e. our personal financial oligarchs please take it all with a grain of salt. And frankly it is not the number of banks but the assets involved that really are the story. Remember our top 4 banks now control a vast amount of American resources - 2 of which were effectively nationalized to keep them alive.

I also said in August 2008

At some point the FDIC will run out of money to guarantee the $100K per account so they will have to raise the fees on the remaining banks to raise more money to fund their bailout fund.

This has happened.... then in November 2008 I said

Again, please don't worry - if we cannot raise fees on banks to pay for their own failures, we always have your grandchildren's fund aka the Great Printing Press. Helicopter Ben stands at the ready. Look for the FDIC to borrow from the US Treasury

for insurance funds by this time next year.

And now that has come true...we have the FDIC borrowing $500B from the Treasury. Because... as always, money grows on trees and our pockets are endless. Folks, I know you are numb to these numbers but that is HALF A TRILLION.

President Barack Obama on Wednesday afternoon signed into law two major housing bills, one of which would allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department to protect the deposits of bank customers.

All you need to know is your banking system is "sound" and money dropped from the heavens has solved all our ills. That's the benefit! Costs? Don't you worry about that - just go out there and shop... we'll discuss costs with your grandchildren at the appropriate time. Let me distract you with the stock market going up - isn't that proof enough that "the right thing" was done? (i.e. enriching a small select group of financial elites at the cost of generations of debt?) The answer is clearly yes because when the market is up, we know everything is right in the world.

Here are the latest "incorrect" statistics

U.S. “problem” banks climbed 21 percent to the highest total in 15 years in the first quarter... The FDIC classified 305 banks with $220 billion in assets as “problem” lenders as of March 31, rising from 252 with $159 billion in assets in the fourth quarter, the agency said today without naming any institutions.
The FDIC said its insurance fund slumped 25 percent in the period. The insurance fund fell to $13 billion, from $17.3 billion in the previous quarter. The FDIC is imposing an emergency fee to raise $5.6 billion to rebuild the fund. (not a problem - that is where new money borrowed from the Treasury will come in handy - as with any problem in America whether at the state or federal level; just borrow and kick the can down the road.)