Falseflagop
10-01-2008, 10:37 AM
In other words imho a ton of banks about to go down.
By DAMIAN PALETTA
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The Senate financial market rescue bill would temporarily allow the Federal Deposit Insurance Corp. to borrow unlimited amounts of money from the Treasury Department in connection with the larger government deposit coverage that would extend until the end of next year.
This is important because it would increase the backstop that the FDIC has to make sure that insured depositors can be repaid if their bank fails.
U.S. President George W. Bush will speak with lawmakers to bolster backing for the Senate's $700 billion market-rescue bill. The revised version of the defeated House bill is set for a vote tonight.
Bush: Financial Security Is at Stake
1:05
President Bush argues the need for quick congressional action on a rescue plan. If action is not taken, he says, the "economic damage will be painful and lasting." Video courtesy of Fox News. (Sept. 30)
The vote most likely will come after 7:30 p.m. EDT, according to an aide in Senate Majority Leader Harry Reid's office. The vote is being held after sunset in observance of the Jewish holiday Rosh Hashanah.
"We appreciate the work by Senators Reid and McConnell to modify the bill and bring it to the floor for a vote tonight," White House spokesman Tony Fratto said Wednesday, referring to Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.). "We look forward to the debate, and hope to see strong support."
Mr. Fratto said conditions in the economy make the bill's passage crucial. "This morning we're seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it's critically important that we approve legislation this week and limit further damage to our economy," he said.
See a Photo Slideshow
View Slideshow
Getty Images
A stockbroker looked at her screen in Frankfurt.
FDIC and Treasury officials asked Senate lawmakers Tuesday night to include a provision in the revised financial rescue bill that would increase the amount of money that the FDIC could borrow from Treasury to $100 billion from $30 billion. But Senate lawmakers decided to take off the cap completely, authorizing the FDIC to request from the Treasury "a loan or loans in an amount or amounts necessary… without regard to limitations."
The unlimited borrowing authority would last until the end of next year. The Senate has scheduled a vote on the proposal tonight. The measure would then go to the House, which rejected an earlier version of the $700 billion plan on Monday.
The legislation would also increase the government deposit insurance ceiling for banks and credit unions from $100,000 to $250,000 for most depositors. This means that the FDIC will be responsible for insuring a lot more money if more banks fail, which could put extreme pressure on its already low deposit insurance fund. At the end of the second quarter, the FDIC had roughly $45 billion in its insurance fund to back close to $4.5 trillion in insured deposits.
A New Start
Full Text of the Revised Bill
A Failed Bailout Vote
Opinion: The Beltway Crash
Page One: Bailout Plan Rejected
Real Time Econ: Congress Passes Hot Potato Back to Bernanke
Vote Tally: How Representatives Voted, by State
Deal Journal: Who's at Fault? And What's Next?
Political Wisdom: Big Failure, Bigger Blame Game
Deal Journal Video:'Politics Over Fiscal Sensibility'
Wash Wire: McCain Points to Obama and Democrats
Vote: Should the House have approved the bailout plan? Vote: YES | NO
The last time the FDIC borrowed money from the Treasury Department was when the agency tapped a separate Treasury Department window during the savings and loan crisis. The money was used as short-term funds while the agency disposed of assets collected during bank failures. The FDIC has never had to use the $30 billion credit line before.
There have been 13 bank failures this year and regulators are expecting more in the months to come.
The move to boost deposit-insurance limits received a boost Tuesday when presidential candidates Sens. John McCain and Barack Obama endorsed the idea. Both candidates planned to return to Washington Wednesday for the possible Senate vote. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which oversees the program, said she would support temporarily raising the coverage.
The Senate vote would come after the U.S. House shocked Wall Street and Washington Monday by voting 228-205 to defeat the bailout legislation, a move that sent the Dow Jones Industrial Average tumbling more than 700 points.
"I'm willing to do this given the exigencies we're looking at," said Sen. Christopher Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee. "This is a matter I normally want to give a lot more consideration to than 24 hours."
These seemingly minor moves are part of an effort by White House and congressional leaders to rescue the president's proposal by giving it a running start in the Senate. Mr. Bush has said the plan is vital to ensure the proper functioning of the financial system. The proposal was defeated Monday in a stunning revolt by rank-and-file lawmakers, sending global stock markets reeling.
It's not clear if the measures will be enough to reverse Monday's defeat, although initial indications suggest they will attract lawmakers to the legislation. The moves wouldn't fundamentally change Treasury's proposal to buy troubled assets, but would add a populist tinge at a time when voters appear enraged at what many see as a bailout of Wall Street, not Main Street.
Federal law generally insures depositors up to $100,000 when banks fail. The limit hasn't been increased in more than two decades. Proponents of raising the limit say runs on deposits, fueled by consumer fears about the economy, have contributed to recent financial turmoil, and played a part in the collapse of IndyMac and Washington Mutual Inc. They say higher limits will restore confidence in the banking system by comforting consumers who might otherwise take their money out.
Congressional aides said a new proposal could build support among centrist Democrats and Republicans by addressing concerns that the Bush-backed bill needs more protections for Main Street.
Such a measure would also win the backing of community bankers, who have lobbied heavily on its behalf. The U.S. government recently began insuring money-market mutual funds temporarily. Bankers argue that takes away one of their advantages over those funds, which offer better yields than bank deposit accounts. The community banking industry is a powerful force behind the scenes in Congress and its clout could sway some lawmakers to support the bill.
Adding to the pressure on Congress to act were some of the nation's biggest corporations, including Verizon Communications Inc., Microsoft Corp. and General Electric Co. GE Chief Executive Jeffrey Immelt is actively lobbying politicians and finance officials in Washington to complete the financial-rescue bill, said a company spokesman. To back up his message, Mr. Immelt directed his staff to compile evidence of the "negative ripple effects" throughout America from the crisis on Wall Street, including information on what is happening to customers and employees in all 50 states.
It's not clear why the idea of raising deposit insurance was left out of the original bill that failed. Republicans say they pushed it, only to be rejected. Democrats counter that it wasn't floated during the last round of negotiations over the weekend.
In supporting the move, the FDIC's Ms. Bair said it "would provide the dual benefits of providing additional liquidity to banks for lending as well as provide some additional reassurance to depositors above the current limits."
In the days after Hurricane Katrina, small banks along the Gulf Coast endured deposit runs, prompting calls by bankers in the region for a temporary increase in deposit-insurance limits. Depositor fears subsided, and the bankers backed off of their request. Amid the current market turmoil, similar runs have created problems for regulators and bank managers.
"What we're seeing, in general terms, is almost irrational behavior on behalf of some consumers who are panicking," said Scott Polakoff, the senior deputy director at the Office of Thrift Supervision, which regulates savings and loans.
—Greg Hitt, Henry J. Pulizzi and Maya Jackson Randall contributed to this article.
By DAMIAN PALETTA
Article
Video
Slideshow
Comments
MORE IN POLITICS & CAMPAIGN »
EmailPrinter Friendly
Share:
Yahoo Buzz
MySpace
Digg
Text Size
The Senate financial market rescue bill would temporarily allow the Federal Deposit Insurance Corp. to borrow unlimited amounts of money from the Treasury Department in connection with the larger government deposit coverage that would extend until the end of next year.
This is important because it would increase the backstop that the FDIC has to make sure that insured depositors can be repaid if their bank fails.
U.S. President George W. Bush will speak with lawmakers to bolster backing for the Senate's $700 billion market-rescue bill. The revised version of the defeated House bill is set for a vote tonight.
Bush: Financial Security Is at Stake
1:05
President Bush argues the need for quick congressional action on a rescue plan. If action is not taken, he says, the "economic damage will be painful and lasting." Video courtesy of Fox News. (Sept. 30)
The vote most likely will come after 7:30 p.m. EDT, according to an aide in Senate Majority Leader Harry Reid's office. The vote is being held after sunset in observance of the Jewish holiday Rosh Hashanah.
"We appreciate the work by Senators Reid and McConnell to modify the bill and bring it to the floor for a vote tonight," White House spokesman Tony Fratto said Wednesday, referring to Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.). "We look forward to the debate, and hope to see strong support."
Mr. Fratto said conditions in the economy make the bill's passage crucial. "This morning we're seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it's critically important that we approve legislation this week and limit further damage to our economy," he said.
See a Photo Slideshow
View Slideshow
Getty Images
A stockbroker looked at her screen in Frankfurt.
FDIC and Treasury officials asked Senate lawmakers Tuesday night to include a provision in the revised financial rescue bill that would increase the amount of money that the FDIC could borrow from Treasury to $100 billion from $30 billion. But Senate lawmakers decided to take off the cap completely, authorizing the FDIC to request from the Treasury "a loan or loans in an amount or amounts necessary… without regard to limitations."
The unlimited borrowing authority would last until the end of next year. The Senate has scheduled a vote on the proposal tonight. The measure would then go to the House, which rejected an earlier version of the $700 billion plan on Monday.
The legislation would also increase the government deposit insurance ceiling for banks and credit unions from $100,000 to $250,000 for most depositors. This means that the FDIC will be responsible for insuring a lot more money if more banks fail, which could put extreme pressure on its already low deposit insurance fund. At the end of the second quarter, the FDIC had roughly $45 billion in its insurance fund to back close to $4.5 trillion in insured deposits.
A New Start
Full Text of the Revised Bill
A Failed Bailout Vote
Opinion: The Beltway Crash
Page One: Bailout Plan Rejected
Real Time Econ: Congress Passes Hot Potato Back to Bernanke
Vote Tally: How Representatives Voted, by State
Deal Journal: Who's at Fault? And What's Next?
Political Wisdom: Big Failure, Bigger Blame Game
Deal Journal Video:'Politics Over Fiscal Sensibility'
Wash Wire: McCain Points to Obama and Democrats
Vote: Should the House have approved the bailout plan? Vote: YES | NO
The last time the FDIC borrowed money from the Treasury Department was when the agency tapped a separate Treasury Department window during the savings and loan crisis. The money was used as short-term funds while the agency disposed of assets collected during bank failures. The FDIC has never had to use the $30 billion credit line before.
There have been 13 bank failures this year and regulators are expecting more in the months to come.
The move to boost deposit-insurance limits received a boost Tuesday when presidential candidates Sens. John McCain and Barack Obama endorsed the idea. Both candidates planned to return to Washington Wednesday for the possible Senate vote. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which oversees the program, said she would support temporarily raising the coverage.
The Senate vote would come after the U.S. House shocked Wall Street and Washington Monday by voting 228-205 to defeat the bailout legislation, a move that sent the Dow Jones Industrial Average tumbling more than 700 points.
"I'm willing to do this given the exigencies we're looking at," said Sen. Christopher Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee. "This is a matter I normally want to give a lot more consideration to than 24 hours."
These seemingly minor moves are part of an effort by White House and congressional leaders to rescue the president's proposal by giving it a running start in the Senate. Mr. Bush has said the plan is vital to ensure the proper functioning of the financial system. The proposal was defeated Monday in a stunning revolt by rank-and-file lawmakers, sending global stock markets reeling.
It's not clear if the measures will be enough to reverse Monday's defeat, although initial indications suggest they will attract lawmakers to the legislation. The moves wouldn't fundamentally change Treasury's proposal to buy troubled assets, but would add a populist tinge at a time when voters appear enraged at what many see as a bailout of Wall Street, not Main Street.
Federal law generally insures depositors up to $100,000 when banks fail. The limit hasn't been increased in more than two decades. Proponents of raising the limit say runs on deposits, fueled by consumer fears about the economy, have contributed to recent financial turmoil, and played a part in the collapse of IndyMac and Washington Mutual Inc. They say higher limits will restore confidence in the banking system by comforting consumers who might otherwise take their money out.
Congressional aides said a new proposal could build support among centrist Democrats and Republicans by addressing concerns that the Bush-backed bill needs more protections for Main Street.
Such a measure would also win the backing of community bankers, who have lobbied heavily on its behalf. The U.S. government recently began insuring money-market mutual funds temporarily. Bankers argue that takes away one of their advantages over those funds, which offer better yields than bank deposit accounts. The community banking industry is a powerful force behind the scenes in Congress and its clout could sway some lawmakers to support the bill.
Adding to the pressure on Congress to act were some of the nation's biggest corporations, including Verizon Communications Inc., Microsoft Corp. and General Electric Co. GE Chief Executive Jeffrey Immelt is actively lobbying politicians and finance officials in Washington to complete the financial-rescue bill, said a company spokesman. To back up his message, Mr. Immelt directed his staff to compile evidence of the "negative ripple effects" throughout America from the crisis on Wall Street, including information on what is happening to customers and employees in all 50 states.
It's not clear why the idea of raising deposit insurance was left out of the original bill that failed. Republicans say they pushed it, only to be rejected. Democrats counter that it wasn't floated during the last round of negotiations over the weekend.
In supporting the move, the FDIC's Ms. Bair said it "would provide the dual benefits of providing additional liquidity to banks for lending as well as provide some additional reassurance to depositors above the current limits."
In the days after Hurricane Katrina, small banks along the Gulf Coast endured deposit runs, prompting calls by bankers in the region for a temporary increase in deposit-insurance limits. Depositor fears subsided, and the bankers backed off of their request. Amid the current market turmoil, similar runs have created problems for regulators and bank managers.
"What we're seeing, in general terms, is almost irrational behavior on behalf of some consumers who are panicking," said Scott Polakoff, the senior deputy director at the Office of Thrift Supervision, which regulates savings and loans.
—Greg Hitt, Henry J. Pulizzi and Maya Jackson Randall contributed to this article.