WaMu goes under it could wipe out FDIC....

[lapfog_1]

Listening to Danny Schechter on KPHX (Jeff Farias show but with a guest host today)...

And when one caller was talking about the fallout of the disaster today, this was one statement he made... if WaMu goes bankrupt (which is likely, imho) it would wipe out the FDIC.

That would mean another run on the banks.

Oh crap.

[JuniperLea]

1. AIG's woes are far scarier, imho...

Worldwide impact.

[eleny]

2. Run on the banks and put the money where?

[aquart]

5. Don't worry about it. It won't be worth anything.

[Journeyman]

3. No it won't. BushCo will just print more money. . .

hyperinflation will be our undoing, not the fulfillment of a meaningless promise.

[TZ]

4. It won't

I have a friend that works at FDIC. Thats not going to happen. FDIC is well funded. It might mean less accounts are insured but FDIC is a large govt entity thats not about to go under. Remember only accounts less than 100,000 are insured.
What WILL cause bank runs is fear mongering ABOUT the FDIC..I will beg people NOT to spread this kind of fear.

[lapfog_1]

7. Hey, I just heard this on the radio

and the guy seems to know quite a bit about the financial institutions.

and, yeah, fear can lead to the very thing you were afraid of... but then, so can a lot of other things.

What I was looking for was how many accounts does the FDIC insure at WaMu (and yeah, I know about the $100K thing, at one point it was a concern for me and I had to open more accounts at multiple banks). What is the exposure there and what resources does the FDIC command.

[Earth_First]

8. I believe that I've read here on DU that FDIC does NOT have enough to cover...

I'll see if I can dig it up.

[BuelahWitch]

10. Thank you!

A voice of reason! :thumbsup:

[Pale Blue Dot]

11. The facts.

The FDIC has $50 billion dollars of reserves. Washington Mutual's collapse would eat up virtually ALL of that. Those are the FACTS, not heresay, not conjecture. If you want me to find links for you I will I could dig up 50.

[JerseygirlCT]

21. Thanks, Sue

That's encouraging, and it's true that the panic seems to become self-fulfilling, doesn't it?

[high density]

6. When the FDIC closes a bank...

It happens well before the bank is 100% bust and the money is all gone.

[Kurt_and_Hunter]

9. Ultimately, the FDIC is not limited to cash on hand.

The FDIC cannot be wiped out except in the context of an economic collapse where you'll he hunting your neighbors for food.

No insured depositor will lose money until and unless congress decides to let the USA go out of business. When push comes to shove the FDIC has as much money as the US government says it has.

Even in the worst case scenario where nobody on Earth would lend us any more money the US would still accept the inflation hit and print money to fund the FDIC.

[Pale Blue Dot]

12. In your worst case scenario,

the money would be worthless by the time you got it.

[wtmusic]

16. You argue against history.

Fundamentals are far stronger than 1929 and as tough as it was, the Great Depression did not cause the sky to fall.

[Pale Blue Dot]

17. "Fundamentals are far stronger than 1929"? In what way? nt

[wtmusic]

22. Money is cheap, the economy is growing at 3.3% (adjusted)

Today, 2.75% of homes are in foreclosure; during the Depression it was roughly 50%.

In the 1980s 1000 thrift institutions were closed holding $519B. The Dow was setting records one year later.

The median price of an existing home is up 8.5 percent from the low of last February.

The federal debt is a serious long-term problem but nothing that will cause a meltdown. The US economy, for better or worse, has become a juggernaut.

[wtmusic]

13. Maybe they will pay us in offshore drilling leases

Surplus Hummers? Opportunities to dunk Cheney with a softball? :shrug:

[rufus dog]

14. One things many commentators exclude

is the assets of banks. So it is likely true that if they had zero assets then they could wipe it out completely. WaMu would have some assets. Think of it this way, when people go bankrupt their liabilities exceed their assets, is many cases just by a little bit.

The comments were the same regarding IndyMac by the way.

[Pale Blue Dot]

15. Right now, WaMU has $143 billion in insured deposits.

So far this year the FDIC is averaging over 30% loss to assets. If you do the math, you'll see that a WaMu failure very nearly wipes out the reserves of the FDIC.

[Robb]

18. But only if FDIC

...insures every cent. Which it doesn't; exclude accounts over $100,000 and you have a much more reasonable number, I'd bet.

[Pale Blue Dot]

19. The $143 billion I quoted IS for "insured deposits."

People really need to stop fooling themselves. It IS that bad.

[yodoobo]

20. FDIC has an infinite supply of money

Without a doubt, the government would simply print more money to fund any shortfalls.

The problem however, is hyperinflation. With an infinite money supply you have infinite inflation.