Reply #46: Actually it's about half that number and an FDIC payout would go to DEPOSITORS [View All]

[econoclast]

FDIC insures deposits up to 250,000

According to the FDIC website a little over 50% of BoA deposits are insured
That leaves the FDIC risk at about 550 billion dollars. Still a very big number.

The FDIC insures the depositors, so technically, if it happened the FDIC would be paying out mostly to the 99% not to the 1%

But that assumes that BoA just evaporated and there were zero recoveries.

Those are the numbers.

Most importantly though is the fact that the FDIC has risk ONLY if the DEPOSITORS sit still for this! Any BoA insured depositor who leaves their funds at BoA is complicit. By their inaction they are saying, in effect "I'd be happy to provide the capital for your derivatives book ... No worries ... I'm insured by FDIC!!!!!"

The ball is now in the depositors' court. They didn't ask for it. But the responsibility for 550 billion in FDIC risk has been thrust upon them. And it is now up to them to decide.