Nov 9, 2009
On October 30, in the biggest single-day closing of banks so far, the Federal Deposit Insurance Corporation (FDIC) closed all nine banks owned by FBOP Corporation, a large bank holding company. The banks – in California, Illinois, Texas and Arizona – had a total of 153 branches.
The FDIC turned the banks over to U.S. Bankcorp, the sixth largest U.S. bank holding company, owned by billionaire Warren Buffett’s Berkshire Hathaway, Inc. As in earlier similar deals with U.S. Bankcorp and other big banks, the FDIC agreed to cover all losses on the failed banks’ bad assets and take only a small slice of any profits they may make. It is estimated the deal will cost the FDIC two and a half billion dollars.
In coming months, the FDIC is expected to seize hundreds more small and medium-sized failed banks to turn over to bigger banks. In other words, the government is taking advantage of the financial crisis to consolidate ever more of the banking system in the hands of just a few big super-banks. And when these few super-banks begin to fail again, undoubtedly the government will say it must bail them out with our tax money, because they are “too big to let fail.”
Not a bad deal for all the big boys involved!