[quote=BondGuy]Yeah, I’ve seen the FDIC signs posted at my local bank.
I’m aware of what they say. Good luck with that in the only scenerio in
which it would become relevent, financial armageddon.[/quote]



And if the US Government defaults on its obligations to the FDIC (i.e
event of default), how much are your Federal reserve notes going to be
worth?



Good thing you have 100% in physical gold hidden under the mattress.

[quote]The S&L fiaco gave clear insight into how things might play
out. The option of shorting depositors was given due weight.
Bureacratic career decisions were put ahead of clear thinking. As was
politics. The problem with FEd ins standing behind your savings is that
the U.S. tax payer stands behind that insurance. Losing taxpayers money
is one sure way to buy a one way ticket out of DC.[/quote]



Destroying confidence in the US financial system via a wave of bank
failures and lost deposits is another. Just ask Herbert Hoover.

[quote]Once a decision was made on a course of action to resolve the
problem it got ugly. The Feds starting seizing not only insolvent
banks, but solvent ones too.[/quote]



There were alot of minimally solvent S&L’s. On the whole no one had
clue that S&L’s would abuse FSLIC insurance and mismanage
themselves so badly by going wild with fraudulent loans and junkbonds.



http://www.fdic.gov/bank/historical/history/index.html



In this day and age bank failure is rare.



http://www.fdic.gov/news/news/press/2007/pr07009.html



Metropolitan
Savings is the first FDIC-insured institution failure in the country
since June 25, 2004, and the first in Pennsylvania since Pulaski
Savings Bank, Philadelphia, was closed on November 14, 2003.

[quote]So, thank you for the insight, but when it comes to the
bureacrats running the FDIC and the Pols that control the purse
strings, my original post stands. [/quote]



Bank deposits are the same as treasury obligations, both are backed by
the FF&C of the US government. No one has ever lost a cent in
either investment.

Bank deposits are backed by FDIC, which IMHO would be one step removed from FF&C.  It’s an underfunded insurance program.

[quote=joedabrkr]Bank deposits are backed by FDIC, which IMHO would be
one step removed from FF&C.  It’s an underfunded insurance
program. [/quote]



The little sign at the teller window says its backed by FF&C,
congress has affirmed that the FDIC’s DIF is backed by FF&C in 1986.



IMHO, my point was that I think it is unethical to tell people that
bank deposits (under $100,000) are anything other than risk-free assets
backed by the FF&C.

[quote=joedabrkr]Bank deposits are backed by FDIC, which IMHO would be one step removed from FF&C.  It's an underfunded insurance program. [/quote]

My point exactly.

And as Allreit has painstakenly pointed out, no one expected what happened at or to FSLIC to happen. Yet, FSLIC was a sister agency to FDIC. The only difference in these agencies  was in their spectrum coverage. If it had been banks instead of S&Ls that went bust in the 80s, we'd all be living with FSLIC insurance today and FDIC would be the distant memory.

Thinking that what happened then can't happen again, and depending on pols and careerocats to do the right thing is putting just a little to much faith on the pass line for my taste.

[quote=AllREIT][quote=BondGuy]Yeah, I've seen the FDIC signs posted at my local bank. I'm aware of what they say. Good luck with that in the only scenerio in which it would become relevent, financial armageddon.[/quote]

And if the US Government defaults on its obligations to the FDIC (i.e event of default), how much are your Federal reserve notes going to be worth?

Note to Allreit; they're already worth zero since coming off the gold standard. Our dollars aren't worth the paper they're printed on. As an interesting side note, when was the last time the U.uS.Government opened it's valts and counted the Gold. Not that it matters, because it no longer backs our dollars, but that answer would be never.

Good thing you have 100% in physical gold hidden under the mattress.

[quote]The S&L fiaco gave clear insight into how things might play out. The option of shorting depositors was given due weight. Bureacratic career decisions were put ahead of clear thinking. As was politics. The problem with FEd ins standing behind your savings is that the U.S. tax payer stands behind that insurance. Losing taxpayers money is one sure way to buy a one way ticket out of DC.[/quote]

Destroying confidence in the US financial system via a wave of bank failures and lost deposits is another. Just ask Herbert Hoover.

Your right. Which was the reason a payoff was made in this case. My issue isn't with the fact that they paid, it's that they debated about paying. Next time ??????????????

[quote]Once a decision was made on a course of action to resolve the problem it got ugly. The Feds starting seizing not only insolvent banks, but solvent ones too.[/quote]

There were alot of minimally solvent S&L's. On the whole no one had clue that S&L's would abuse FSLIC insurance and mismanage themselves so badly by going wild with fraudulent loans and junkbonds.

Pretty uniformed here allreit. It wasn't the crooks who created the problem. It was congress who passed laws losening regs, and increasing deposit insurance from 40K to 100K, combined with very lax oversight from the banking regulators. Nor was it bad management. It was too much money chasing too few quality RE deals and the inevitible boom bust cycle it created. The RE market collapse precipitated the S&L crisis. Take alook around at all the still empty or marginal shopping centers built during that era. Add to them the see through office buildings. See through, as in empty, as in unoccupied, as in unleased ,as in foreclosed, as in, no one will buy, as in S&L gets hosed, as in look out here come the RTC guys with the pad locks. That's what no one forsaw. No one saw the bust part of the cycle looming in the distance. But what made headlines were the crooks.

With PSFS, the regulators literally changed the reserve rules on them overnight so they could seize them. They did this because they needed more assets to close the books on the RTC's job of cleaning up the S&L mess. They were within a couple hundred million of being able to balance the books. They needed one more bank. Problem was, there weren't anymore insolvent banks to seize. Well, they figured, that depends on your definition of insolvent. They changed the rules just for PSFS which was admittedly a marginal bank, but one that had done an excellent job of bringing themselves back from the brink. Regulators, FBI etc. swooped in on the bank, booted all the employees with no more than the clothes on their backs, and seized everything. Not only bank property, but personal property as well. They then sold everything. The evening of the seizure, an illegel stealing of property, bank regulators went to the one of the finest steak houses in Philly to celebrate. On our dime of course. They could close the books, and look forward to bonuses and promotions. Which they received. it was only later that the wheels started to come off their bank hold up.

http://www.fdic.gov/bank/historical/history/index.html

In this day and age bank failure is rare.

WOW, there's some thinking for you. Let's see "This ship is unsinkable"

http://www.fdic.gov/news/news/press/2007/pr07009.html

Metropolitan Savings is the first FDIC-insured institution failure in the country since June 25, 2004, and the first in Pennsylvania since Pulaski Savings Bank, Philadelphia, was closed on November 14, 2003.

[quote]So, thank you for the insight, but when it comes to the bureacrats running the FDIC and the Pols that control the purse strings, my original post stands. [/quote]

No one argues that the system works in these one at a time situations.

Bank deposits are the same as treasury obligations, both are backed by the FF&C of the US government. No one has ever lost a cent in either investment.

You might want to run that by the people at PSFS.
[/quote]