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Someone brought this to my attention, as I had not heard of it. It is not so much what they are doing, but why now?
With recovery supposedly at hand, and the financial crisis over thanks to Ben and Timmy, I wonder why they would enact unlimited FDIC coverage for what sounds like checking accounts and commercial clearing accounts.
The only thing that occurred to me was that in the event of a bank run, it might be intended to prevent another short term credit seizure such as was experienced in the financial crisis.
But why now? And why use FDIC to do take on this unlimited liability, far in excess of what it was intended to do? I doubt very much that this is designed to protect individuals per se, given the exclusions.
Curious. Perhaps I am missing something here.
Temporary Unlimited Coverage for Noninterest-bearing Transaction Accounts - FDIC
From December 31, 2010 through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account and the ownership capacity of the funds. This coverage is available to all depositors, including consumers, businesses, and government entities. The unlimited coverage is separate from, and in addition to, the insurance coverage provided for a depositor’s other accounts held at an FDIC-insured bank.
A noninterest-bearing transaction account is a deposit account where:
interest is neither accrued nor paid;
depositors are permitted to make an unlimited number of transfers and withdrawals; and
the bank does not reserve the right to require advance notice of an intended withdrawal.
Note: Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this temporary unlimited insurance coverage, regardless of the interest rate, even if no interest is paid. (lol)
Later - here is an old description that probably fits the bill:
"The FDIC's action is one aspect of its Temporary Liquidity Guarantee Program (TLGP). The full account coverage is aimed primarily at business accounts that need to keep larger balances for covering payrolls and meeting other business needs, but it extends to all non-interest-bearing transaction accounts, whether they are held by businesses or by individuals and households. The FDIC's goal is to help depository institutions retain such accounts, giving small and medium size businesses a reason to keep their balances with their current financial institutions. That would help the institutions maintain their liquidity, and thus enhance their ability to make loans."
Unlimited FDIC Coverage for Checking Accounts - Banking Questions
So it is a measure to prevent another seizure in the credit system in the event of a major bank failure triggering a financial crisis. Do you think it covered JPM's $22 billion bridge loan to AT&T for its purchase of T-Mobile?
Do you think Goldman has a program to sweep all of their funds and their partners' personal money into accounts such as this at the first sign of trouble? Just as GE pays no taxes, expect Wall Street to take no pain, in the very troubles which they have caused.
As an aside, I would have used the FDIC and the government to backstop 100% of all customer money in the banking crisis, and let the banks themselves go through a debt reorganization, taking the executives, bondholders and shareholders to the woodshed, in the manner in which Sweden had dealt with its banking troubles. In the US, UK, and Ireland we saw the opposite approach: save the banks, and the people be damned.
But then again, I am not a major contributor to the campaign coffers of Washington, nor a member of the old boy network, and chances are, neither are you. So there you are.
As bad as this has been, if you think the worst is over you are probably just being wishful, maybe a little naive. There is still some meat on your bones, and the wolves are insatiable.
AGI News
IMF TO SET UP 580 BILLION DOLLAR ANTICRISIS FUND
Chiudi 09:45 25 MAR 2011
(AGI) Washington - The International Monetary Fund will set up, next week, a 580 billion Dollar anticrisis fund. "The greatest concern is the risk of contagion from Portugal," says a well informed source. IMF's top officer, Dominique Strauss-Kahn, will issue the fund, on the basis of the ratification announced on March 11 by the Nab (New Arrangement to Borrow). Last year, the Nab increased 10 times its initial 53 billion Dollars, thanks to the 13 new member countries.
"As it was in the days of Noah, so shall it be with the coming of the Son of man. In the days before the flood, they were eating and drinking, marrying and being given in marriage, even to that very day in which Noah entered into the ark. They did not suspect what was happening until the flood came and swept them all away. So shall the coming of the Son of man also be...Watch therefore, because you do not know at what hour your Lord will come." Matt 24:37-42
"For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms. Therefore put on the full armor of God, so that when the day of evil comes, you may be able to stand your ground, and after you have done everything, to stand." Eph 6:12-13
"Surely, there is at this day a confederacy of evil, marshalling its hosts from all parts of the world, organizing itself, taking its measures, enclosing the Church of Christ as in a net, and preparing the way for a general Apostasy from it. Whether this very Apostasy is to give birth to Antichrist, or whether he is still to be delayed, as he has already been delayed so long, we cannot know; but at any rate this Apostasy, and all its tokens and instruments, are of the Evil One, and savour of death.
Far be it from any of us to be of those simple ones who are taken in that snare which is circling around us! Far be it from us to be seduced with the fair promises in which Satan is sure to hide his poison!
Do you think he is so unskilful in his craft, as to ask you openly and plainly to join him in his warfare against the Truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform.
This is the way in which he conceals from you the kind of work to which he is putting you; he tempts you to rail against your rulers and superiors; he does so himself, and induces you to imitate him; or he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind.
He scoffs at times gone by; he scoffs at every institution which reveres them. He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods.
Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."
J.H.Newman, The Times of AntiChrist, 1890
March 24, 2011-- "There is only one certainty regarding paper money -- the longer you hold it, the less it will buy in terms of real goods or real money -- gold." Richard Russell.
A late day raid on price, again after Europe went home for dinner. It happened at roughly the same time as it did yesterday, but it really did not do so much, and actually failed rather badly in silver.
Next week should be interesting. I do not know what it is going to take to move gold over that neckline in the big inverse head and shoulders formation, or how long it might take. But I suspect strongly that when it does break out we will see another fast move higher, because so many in the markets are not positioned for it. After at least one serious 'gut check' on the longs, gold will most likely move fairly quickly to 1590.
Depending on what happens, I will not be surprised to see gold hitting $2,000 by year end. What concerns me is the potential for a deflationary event this year with another stock market collapse. This will not be a true deflation, but a liquidation panic, that will set up the next round of monetization and a further deterioration of the social fabric.
There is an obvious push from some of the developed countries to enlarge the wars in the Middle East and Asia, from Libya to Afghanistan. This is all about oil, and Keynesian militarism which is the last refuge of corruption in a failing empire.
Stocks opened brightly on the slightly 'better than expected' US GDP revision of the fourth quarter to 3.1%, but it really is moot at this point at the end of the first quarter.
Fukushima weighed on the markets, as it now unfolds that the situation is worse than TEPCO and the government had allowed, with a probable reactor breach unleashing more dangerous radioactive fallout over a wider area.
More later...
