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Why has the main stream media not picked up on this yet?

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Everybody run to  the bank and pull all your funds. Let's get this party started.

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+1, this is what they will do, simply "inject" more funds into the system.  Problem solved (for now)....

They will continue to kick the can down the street a little further for as many kicks as they are able to muster.

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It'll work fine until hyper inflation rapes the hell out of us.

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I believe they have the ability to borrow up to 500 billion if other banks fail and they need access to funds. I don't want to take away from how f'd up it is that they are in the negative however wanted to point out that no one's money is "unsafe" if their bank were to go under.

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Great, another 500 billion fucking "borrowed."  No worries people, they will just move on to ass raping your unborn grandkids kids, your money is perfectly safe

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Agreed

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They do not have that ability. The bill never past the committee. Even if it did they will not be able to draw it out because the US debt limit will be reach. That's why the are forcing the banks to pay 3 years in advance for the insurance. That's not going to happen because the banks are insolvent.

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I saw that too.  It made me chortle.

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This is actually starting to get scary

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This is actually starting to get scary

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The banks are full of the Fed's money.

The Banking System Is Insolvent

Following up on the quick mention now that I have a story to cite from Amherst:

   Cure rates for these distressed loans remain low. Amherst noted a near 0% cure rate of all loans in foreclosure, 0.8% for 90 plus days delinquent, 4.4% for 60 days delinquent and 26.5% for 30-day delinquencies. All told, Amherst expects 12.42% of units (from the 13.54% of properties delinquent and in foreclosure) to eventually liquidate.

Let's put some numbers on this.

There are roughly 125 million single-family homes in the US.

Of those, roughly 30% have no mortgage on them at all.  This leaves 87.5 million single-family homes with mortgages.

Let us assume the average outstanding balance is $200,000 across the entire set and will take a 40% loss severity.  This is less than S&P has estimated for subprime loans and only assumes a roughly 20% market deficiency in the home price (the rest is from legal, rehabilitation and marketing expenses.)

These numbers are, with a high degree of confidence (90%+) low - that is, losses will exceed these estimates, perhaps dramatically so.  It is, for example, quite reasonable to believe that due to the concentration of defaults in higher-priced areas (e.g. California and Florida) that the average outstanding balance could be close to double that $200,000 value and the loss due to negative equity higher.

From this we can develop a "cocktail napkin" view of the losses to be taken in home mortgages for single-family homes (remember, this does not include condos, apartment buildings and similar "commercial" paper.)

$200,000 X 40% = $80,000 loss per foreclosure.

87.5 million homes with mortgages X 12.42% = 10,867,500 foreclosures.

10,867,500
x    80,000
=============
$869,400,000,000

or $869 billion in losses remaining in single-family mortgages alone.

What if the average outstanding is higher and negative equity greater than 20% (which is likely)?  Losses will almost certainly be well north of a trillion dollars.

The entire banking system and likely The Fed, given the quantity of Fannie and Freddie paper it has been and is "eating", is insolvent.  These facts are why the government is lying - they're well-aware of the near-zero cure rates and know that these facts mean that the banking industry has nowhere near sufficient capital to withstand these losses without folding like a paper cup getting stomped on by an elephant.

(Remember that these numbers do not include any commercial real estate losses and we have found that banks are frequently over-stating their claimed values for these loans by 50% or more - as was seen with Colonial.)

It gets better.  The FDIC has a negative balance both in its fund balance and the reserve ratio projected for the end of the quarter, which is, big surprise, tomorrow. Oh, and there is this pesky problem that the FDIC has - contrary to its mandate - been issuing bond guarantees for banks, so if and when that banking insolvency is recognized the FDIC will implode into a gravity well also, since it is on the hook for the entire deficiency of those bonds that were issued with its "guarantee" should they default.

Care to argue with the math folks?

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Banks Tapped to Bolster FDIC Resources
FDIC Board Approves Proposed Rule to Seek Prepayment of Assessments

FOR IMMEDIATE RELEASE
September 29, 2009  Media Contact:
Andrew Gray (202) 898-7192
[email protected]  


The Board of Directors of the Federal Deposit Insurance Corporation today adopted a Notice of Proposed Rulemaking (NPR) that would require insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The FDIC estimates that the total prepaid assessments collected would be approximately $45 billion. The FDIC Board also voted to adopt a uniform three-basis point increase in assessment rates effective on January 1, 2011, and extend the restoration period from seven to eight years.

FDIC Chairman Sheila C. Bair said, "First and foremost, bank customers should know that their insured deposits have and always will be 100 percent safe, no matter what. This commitment to depositors is absolute. The decision today is really about how and when the industry fulfills its obligation to the insurance fund. It's clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem. In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer. This proposal is a vote of confidence for the banking industry's resilience, and it will continue to recover its strength as we work through the significant challenges ahead."

Prepayment of assessments will allow the industry to strengthen the cash position of the Deposit Insurance Fund (DIF) immediately, while allowing the capital impact of deposit insurance assessments to be felt gradually over time as the industry improves its own financial position. The banking industry has substantial liquidity to prepay assessments. As of June 30, FDIC-insured institutions held more than $1.3 trillion in liquid balances, or 22 percent more than they did a year ago. Prepaying assessments will put the industry's liquid balances to good use in conserving capital and helping to maintain the capacity of banks to lend while they rebuild the DIF. FDIC analysis indicates that this arrangement is much less likely to impair bank lending than a one-time special assessment.

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They were saying earlier today on the news that your deposits are still safe.

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OK, now it is time to worry...

One upside to being unemployed and broke, no money to worry about losing.

Brother can you spare a dime?
 

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When things are fine, people don't have to remind you how fine things are.

History has proven this repeatedly.

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When things are fine, people don't have to remind you how fine things are.

History has proven this repeatedly.

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The banks are full of the Fed's money.

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When things are fine, people don't have to remind you how fine things are.

History has proven this repeatedly.

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When the FDIC placed ads begging depositors to keep their money in the bank. You know trouble is coming.



http://www.youtube.com/watch?v=JhrCPhYk5m8&feature=player_embedded

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It's better to be broke than to have 90% of your life's fruits in the bank.

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It's better to be broke than to have 90% of your life's fruits in the bank.

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On a serious note, when it all hits the fan, what will our banking/financial system look like?

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A reasonable assertion. But the numbers don't lie. People just lie about what the numbers mean.

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The banks are full of the Fed's money.

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Screw the lead, bullets or ammo.

I'll take food and water, as much as I can pack into my house.

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"IN A SHOEBOX!? What the hell was she thinking. Put that money back into the Bank NOW!"





I agree, that doesn't look too good.


 

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Why doesn't another Insurance company step in?

FDIC=FAIL

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The banks are insolvent. Period. That's why they are closing down left and right. That is why the FDIC has no more money to back depositors.

At the end of July this year, US banks were sitting on $729 billion of cash against $1.9 billion in July last year.

In the United Kingdom, bank cash reserves jumped from £28.6 billion in July last year to £161.3 billion at the end of July this year.

In the eurozone, bank reserves climbed to €505 billion in June this year from €227 billion in June last year before settling at €394 billion in July this year.

At the end of July this year, US banks were sitting on $729 billion of cash against $1.9 billion in July last year.

In the United Kingdom, bank cash reserves jumped from £28.6 billion in July last year to £161.3 billion at the end of July this year.

In the eurozone, bank reserves climbed to €505 billion in June this year from €227 billion in June last year before settling at €394 billion in July this year.

The FDIC's Deposit Insurance Fund reserve ratio fell. A higher level of losses for actual and anticipated failures caused the insurance fund balance to decline during the fourth quarter by $16 billion, to $19 billion (unaudited) at December 31. In addition to having $19 billion available in the fund, $22 billion has been set aside for estimated losses on failures anticipated in 2009. The fund reserve ratio declined from 0.76 percent at September 30 to 0.40 percent at year end.

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Not all banks.

Read this:
http://mises.org/story/3697

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They would say that regardless of whether it were true or not.

I'm not saying it's not true, but they'd be saying everything was fine even as it burned down around them.

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So my grandfather has about $200k stashed in 3 banks.  What do I tell him to do with his money?

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Not all banks.

Read this:
http://mises.org/story/3697