Wednesday, September 17, 2008

Federal Bank Insurance Fund Has Dipped Below Congressionally Mandated Minimum... Plus Other Dismal Factoids

Associated Press released an article this evening asserting that the Federal funds used to cover FDIC insured accounts have dipped below the Congressionally mandated minimum balance required. The article also asserts that if Washington Mutual (WaMu, ticker WM) fails, then the Treasury COULD be required to tap tax payer dollars due to shortages in the Federal Bank Insurance Fund. When the FDIC chairwoman was asked about the possibility of tapping the Treasury for a line of credit she stated that FDIC wasn't expecting to tap the Treasury. At the same time, she didn't rule it out.

Other dismal factoids in the AP article include:

(1.) 2% or 1 in every 50 banks don't meet regulators' standards of adequate capital
(2.) Standard and Poors cut WaMu's debt rating to "junk" status
(3.) Total assets of banks on the FDIC's troubled list increased 300% in the 2nd quarter.

Here's the AP article that was summarized above.

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