This Should Keep You Up Tonight

The F.D.I.C. is the Federal Deposit Insurance Corporation. It's job is to - that's right, insure deposits. That way, when John Q Public, who was dumb enough to have - and leave - 20K in IndyMac bank and the thing blows up like Kirstie Alley on a McDonalds binge, well, the FDIC steps in and gives him his money back, up to 100K.

It is self-funded through fees charged to its customer banks, and maintains a pool of money to pay claims when banks fail.

Care to know just how big that pool of money is?

From the FDIC website.

The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. With an insurance fund totaling more than $49 billion, the FDIC insures more than $3 trillion of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country.

Wow - 49 billion set aside to cover 3 trillion in deposits. Shit, that makes Social Secuirty look like Berkshire Hathaway. I'm just stunned that they could have so little put aside. What happens when Washington Mutual goes under this week? No way ddo they have enough to cover the claims - again, I am shaking my head over this one.

To put it another way - for every dollar in possible claims the FDIC might have to pay the hacve set aside 1.6 cents. And this is all before they had to pony up 8B for IndyMac customers.

Let's see how Washington Mutual is doing today.

Last Trade: 3.23
Trade Time: 4:01PM ET
Change: 1.72 (34.75%)
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Open: 5.13


Down 35% for the day and headed to zero. What a clusterfuck.