The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

FDIC Is Broke

Oct 12, 2009

Over the last year, almost 100 banks have gone bankrupt and have been taken over by the FDIC. To finance these takeovers, the FDIC has burned through all 50 billion dollars in its fund, and is now considered to be broke. Yet hundreds more banks are in danger of going bankrupt over the next year.

The FDIC is supposed to assure that the money of depositors is insured and safe. It is supposed to be funded by insurance premiums that the banks themselves pay on those deposits.

But the banks have kept their premiums into the fund at a minimum. In fact, for 10 years, between 1996 to 2006, the banks didn’t pay any premiums into the FDIC at all – even after a 120 billion dollar taxpayer-funded bailout of the savings and loan industry five years earlier.

The money the banks did not put into FDIC premiums went to fatten their own profits.

Now that a new and much bigger crisis has struck, the bankers are once again getting ready to stick taxpayers with the bill for another gargantuan bailout.