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Recipe For Armageddon: FDIC To Back $75 Trillion Of BOA Derivatives Trades
In reading both chosen articles below … I thought of these presented situations of the banks running to hide their worth in the protection of the FDIC which was put their to help the common working and struggling people in times of a bank folding … I considered what they were doing, in the metaphor of the Three Little Pigs and that huffing and puffing Big Bad Wolf …
And in this metaphor version … I see the little pigs as the big and greedy banks … and the Big Bad Wolf, as the Wind of Time …
And now that the Wind of Time is huffing and puffing and blowing the sinister banks down … the greedy pigs are now running to hide their ill gotten goods in the old brick house of the FDIC …
Now the proprietors of the FDIC-brick house … don’t appear to want the greedy piggy’s ill gotten gains inside their building … because they knew the Wind of Time would soon be howling and blowing and lashing against the walls of the old brick house …
And the proprietors of the FDIC-brick house …. had only made previsions for what they themselves had stored as to protect those whom depended on them …
And they knew that taking on the burden of the greedy pigs .. would make the house weak from the inside … and that would make the walls weak when the Wind of Time had arrived ..
No doubt the greedy pigs will pull out every trick in the book as to hide behind the walls of old brick house …. and I know that in the tale of the Three Little Pigs … the brick house did indeed hold out against the big bad Wind of Time …
But in the metaphor I see … because the brick house’s foundation and principles were Positive and good, the brick house itself did stand strong against the Wind of Time …
But the windows and doors blew open … and sucked out all the negative and sinister piggies whom had barricaded themselves in the brick house .. leaving only the good and Positive foundation and principles … and the good and Positive proprietors …
That which is Positive, righteous and good … will always stand …
.
What Is The FDIC ?
HERE The FDIC, or Federal Deposit Insurance Corporation, is an independent agency of the US federal government created to preserve and promote public confidence in the US banking system.
The FDIC was created by Congress in 1933 as part of the Glass-Steagall Act.
The primary activity of the FDIC is to ensure deposits against loss due to bank insolvency.
The FDIC insures certain types of account including checking accounts, savings accounts, and certificates of deposit, up to a total of $100,000 per depositor, and accounts held jointly as well as retirement accounts, can also separately be insured up to $100,000 by the FDIC.
Because the sister institution created along with the FDIC, the FSLIC (Federal Savings and Loan Insurance Corporation), failed when a large number of Savings and Loans failed in the late 1980s and early 1990s, the FDIC now insures S&Ls, too.
Critics of the FDIC suggest that today the FDIC could similarly fail if confronted with the insolvency of one "too big to fail" bank, which might result in a government bailout akin to the S&L bailout.
Recipe for Armageddon: FDIC to back $75 Trillion Of Bank Of A’s Derivatives Trades
HERE by Henry Garman on October 18, 2011
This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
Full report HERE
super glue the doors shut and duct tape the steering wheel back on, the Fed has been drinking and its time to drive us all home from the party.