Raft of failed banks put U.S. on hook for billions (WSJ) This article notes that loss-share agreements FDIC has signed with healthy banks that acquire failing banks put it on the hook for $80 billion. I think that’s the total figure FDIC could conceivably lose if the loss rate on the assets in question was 100%. That’s fairly unlikely. In any case, bank failure press releases include estimates for losses FDIC expects from each deal, so they’re reserving for them. Of course many bank failures have ended up costing significantly more than FDIC’s initial estimate…
There’s good news and bad news in the FDIC’s quarterly profile of the banking sector. The good news is that FDIC has more resources than you think to handle the problem banks on its radar. The bad news is that the too-big-to-fail banks aren’t on it.
Lots of news out of FDIC these last two days. Yesterday they announced rules for private equity investors that want to buy failed banks. They also extended the “temporary” insurance program for transaction accounts to June 30th of 2010. This program insured $736 billion as of June 30th.
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