I've been thinking about the FDIC (Federal Deposit Insurance Corp.) lately, how last spring they needed capitalizing to remain solvent. Since then there has been a steady stream of bank failures especially lately, so many in fact, that I jokingly refer to Friday afternoons as "bank failure Friday." So what condition is the FDIC in? Why don't you ever hear anything about it right now? Are we being set up for a big banking crisis when all of a sudden ka-pow, we're broke? Is this just a new excuse to print more money? Is this an excuse to make a new global currency? My sister Miriam called last night. She had heard the FDIC is bankrupting. I decided to search the web a little. Not much new talk, I guess we're all fixated on health care/clunker talk. Here's a little bit of gleanings I did find: Into the battle against bank insolvency the Fed brings a level of reserves that can best be described as paper-thin. From almost $60 billion last fall, the FDIC's reserves have been drawn down to only about $13 billion today, a 16-year low As you can see, the Federal Deposit Insurance Corporation currently covers each dollar on deposit with a trivial 2/10ths of a penny. Other measures of how serious the losses at banks are becoming can be seen in the chart below, which shows charge-offs and non-current loans at all banks. You can see that the Net Charge-offs remain stubbornly high, with banks charging off almost $40 billion in bad loans in the last two quarters alone. It is hard to draw any other conclusion but that hundreds of billions in new funding will be required to keep the FDIC operating. Given the catastrophic consequences of the FDIC failing, starting with a bank run of biblical proportions, there's no question it will get whatever funding it needs. By loading the new loan guarantee responsibilities and the PPIP onto the FDIC's back, the administration will go back to Congress and ask for the next large bailout. Fasten your seatbelts folks.......... | 
