I agree with you patientrenter – all of the loose change drawers will continue to be refilled promptly – this strategy will work … until it doesn’t
“I believe the FDIC is broke and knows it; that under the law they should have seized these three banks (and many dozens more, including some really big ones) some time ago, but doing so will force them to tap the Treasury “emergency” credit line. They’re well-aware that this could instill quite a bit of panic in the public (never mind Congress!); as such they, along with OTS and OCC are conspiring to (once again) hide the truth and pray for an economic recovery before they are forced to act as the law demanded months or even years ago!
This is nothing more than an attempt to keep this graph from looking dramatically worse than it already does and keep the “green shoot” lie alive to pump the stock market so that Americans “feel better.” Big banking and other executives are taking advantage of this lie by selling shares into an overheated market (which they have been doing, by the way: Insider sales are at levels last seen just before the top in October of 2007!)
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“They’re well-aware that this could instill quite a bit of panic in the public (never mind Congress!)”
I think this is the real issue – when you are playing hide-the-sausage with printing press money you have to maintain the people’s confidence in the system – refilling the FDIC loose change drawer could cause a serious blow to this confidence
edit: on the other hand, allowing FDIC to go broke would obviously cause a bigger confidence issue so, one way or another, FDIC will continue to have funding and they will continue to ignore banks that should be shut down – like I said, this strategy will work until it doesn’t
