If the FDIC becomes insolvent, the government will bail them out. As they will bail out the Pension Benefit Guaranty Corp, and they bailed out LTCM and hundreds of banks in the 1980’s.

What global superstorm? What collapse of the financial world? I think you are getting carried away here.

The statements about systemic risk of GSEs are coming regularly from the US government. Here is a talk given by a US Treasury Department official last week. He is passionate about GSE reform.

“Past history reminds us that serious financial problems in the GSEs are not only a possibility, but an unfortunate reality. And, I feel compelled to remind you that the federal government has taken steps to assist a troubled GSE in the past.” Emil Henry W. Jr., US Treasury, 6/26/2006