Don Ke nobi
/ 83.5.83.* / 2009-08-19 20:33
On January 1 2009 the FDIC reported it had $17,276 million in the DIF and according to press releases for each failed bank, the estimated total costs for FDIC’s DIF during Q1 amounted to $2,146 million, leaving $14,997 million in the fund. However, according to the latest FDIC Quarterly report the fund counted $13,007 million at the start of Q2, – a difference of $1,990 million.
In other words, the estimated spending on failed banks during Q1 was $2,147 million, but the bill ended up around $4,137 million instead.
The ultimate bill was nearly twice the original FDIC estimates, 92% greater. (So the $3.67 Billion bill for last Friday will probably end up costing something north of $6 Billion). Why is this happening?
Once again, the relaxation of the accounting standards for banks has come back to bite us. Banks are lying to themselves and to the regulators. Once the lies can no longer be covered up, the total bill turns out to be far higher than anyone is estimating.
It's interesting to note that insured deposits recently declined for the first time in at least a decade (probably more). It undermines the idea that the American consumer is saving money as fast as he/she can. Instead, the America/consumer is either paying down debt or defaulting on it.