Washington Mutual Inc, the failed U.S. savings and loan, has sued the Federal Deposit Insurance Corp for well over $13 billion in connection with the loss of its banking operations, which was acquired by JPMorgan Chase & Co.
In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a "cryptic disallowance" of its claims, prompting the lawsuit.
It also accused the FDIC of agreeing to an unreasonably low price in arranging the a $1.9 billion sale of the banking business to JPMorgan on September 25, when regulators seized Washington Mutual and appointed the FDIC as receiver.
This is just unbelieveable. The Boston Globe reports:
The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.
The Connecticut Democrat's effort -- which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner -- would give the FDIC access to more money to rebuild its fund that insures consumers' deposits, which have been hard hit by a string of bank failures.
Why is this significant? At minimum the FDIC is preparing for a lot more bank failures. Currently the loan limit is $30 Billion and the FDIC is primarily funded by fees paid by banks.
The fund held $52.4 billion at the beginning of 2008. One year and 25 bank failures later, the fund held $18.9 billion.
So far this year, 14 banks have failed, draining another $1.7 billion from the insurance fund.
If money cannot be collected quickly enough from the industry, the FDIC could be forced to borrow money from taxpayers by taking a loan from the Treasury Department.
Combine this announcement with the Federal Reserve already being the lender of last resort for all short-term corporate lending, and we have the taxpayer now backing the entire financial system.
WASHINGTON (AP) -- The FDIC will guarantee up to $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan.
The directors of the Federal Deposit Insurance Corp. voted Friday to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending.
The FDIC will provide temporary insurance for loans between banks -- except for those for 30 days or less -- guaranteeing the new debt in the event of payment default by the issuing bank.
Ya gotta shake your head when just like that Hank Paulson and the Bush administration hand over $250 billion to selected banks yet try to fight any of the bail out money going to homeowners.
FDIC publishes $24 billion plan to avert 1.5 million foreclosures by end of 2009
Testifying on Capitol Hill Friday, Neel Kashkari, the Treasury Department's assistant secretary for financial stability, said the aim of the $700 billion plan was to make investments with the hope of getting the money back. That he said, was "fundamentally different from just having a government spending program" that would disburse money with no chance of ever seeing any returns.
Government spending program? No returns? Seems like financing executive pay packages for do nothings who already ran their companies into the ground is the real spending program with no returns.
The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said
The terms, not official would be:
The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay
New York Times is reporting $250 billion for investing in large and small banks.
The FDIC will give unlimited insurance on non-interest bearing bank deposits.
Now check out the New York Times graph of who gets the most, already decided. That is $125 billion already doled out to our fab 8 which means there is only half left for anyone else.
At least they are getting preferred stock for the deal.
Supposedly the program was not voluntary and supposedly they will have reduced executive compensation so far ill defined.
Hank getting tough with his buddies? Not too sure since he just handed over billions.
Other banks in the U.K. and Europe also have seen noticeable outflows since Ireland's ground-breaking deposit guarantee was announced Tuesday, say people familiar with the matte
Even though the UK raised insurance last week, they are now under pressure to guarantee all deposits.
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