Bank Failures

So 2 more moderate sized banks go into FDIC receivership, on Friday afternoon so you will not notice. Estimates are that as many as 2200 banks will fail, far outstripping the assets of FDIC. To suppress the panic the FDIC will be backed up by the US Treasury. Is the US Treasury a magical pile of money that can keep regenerating itself? Or is there a bottom somewhere?

Update: How safe are you? Although FDIC insures your deposits up to 100K, if you have more than this in accounts with the same name in the same bank you will lose anything over 100K. Your bank is only required to have cash assets of the equivalent of 10% of what is in checking accounts and nothing of what is in savings accounts. Where is all the money? Out in bad loans, bad mortgages and crazy financial instruments too esoteric to understand but all OK in our current deregulated system.
Deregulation is the baby of good old Phil Gramm, who was in back of Enron and current crisis at UBS. He has written the economic policy of McCain and will certainly remain as a shadow adviser for more of the same. US Economy for the big bucks guys--suck until dry and then toss away.