Irish Liberty Forum

FDIC Dodges WaMu’s Bullet

leave a comment »

Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history, eclipsing the 1984 failure of Continental Illinois National Bank and Trust in Chicago, an event that presaged the savings and loan crisis. IndyMac, which was seized by regulators in July, was one-tenth the size of WaMu.

The one bright spot for US taxpayers is the buyout by JPMorgan, which saves them from insuring WaMu’s accounts through the FDIC. Ironically, the FDIC, what was supposed to be the US deposit insurer of last resort, will probably itself need a bailout in the near future. According to a research firm quoted by Bloomberg, the $45 billion fund will need about $200 billion to cover the 100 banks which are estimated to fail from now through 2009. A WaMu bailout alone would have cost $30 billion.

Of course, the activities of the FDIC will seem positively quaint if the $700bn Paulson bailout is passed.

Advertisements

Written by Graham

September 26, 2008 at 7:08 am

Posted in economics, finance, USA

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: