Cash-Strapped FDIC
By Bernhard Warner
Posted Wednesday, Aug. 27, 2008, at 7:06 AM ET
You can add the Federal Deposit Insurance Corp. to the list of entities that may be in line for a Treasury Department bailout, the Wall Street Journal reports, following an interview with the agency's chairwoman.
The FDIC is a bit cash-strapped these days as it props up failing banks across the country. It announced on Tuesday that 117 ailing banks are now under its care and that the FDIC holds an astounding $78 billion in distressed bank assets, the Guardian points out. And, the New York Times says, the FDIC sees the banking crisis going from bad to worse.
All this turmoil and further pain explains why the FDIC may need a loaner from the Treasury "to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank," the WSJ says, after scoring an interview with the FDIC's Sheila Bair. The agency has gone cap in hand to the Treasury before—in the early 1990s, after the savings-and-loan debacle forced thousands of banks out of business. The FDIC's Bair reassures the WSJ that a loan would cover short-term operating costs—not losses, she asserts—"for liquidity purposes."
With inflation running too high for its liking, the Federal Reserve is hinting it will raise the benchmark interest rate, the NYT reports. The paper has decoded the minutes from the most recent Fed meeting in August and concluded: "Expect Fed policy makers to eventually raise their benchmark interest rate in an effort to slow inflation, but they have not agreed to a timetable for the move." Fed watchers on Wall Street believe "the central bank is carefully watching the trend of rising prices, and is more likely to raise rates than lower them by the beginning of next year," according to the paper.
Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold