Friday, October 2, 2009

Investment Grade? Your FDIC deposit isn't "I" anymore

If you want to understand where I’m going with my next blog post coming this weekend, please take 26 minutes and listen to the most audacious accounting slight of hand pulled off by the FDIC board on September 29, 2009. This is the day before September 30 which happened to be the day that the FDIC actually fulfilled my forecast of becoming insolvent. (Remember that the Chairman of the FDIC said that it was "impossible" for this to happen just a few months ago) And yes, take heart, the “staff” are optimistic that they can be compliant with their statutory reserve balance in 2017! The Bush administration’s expansion of deposit guarantees – unaltered by the current administration – means that the U.S. depositor has an actuarially insolvent position and, as of October 1, 2009 – we’re all 100% exposed and effectively uninsured. So, how does it feel? The “full faith and confidence” of the U.S. banking system now hangs on an accounting game where banks will “pre-pay” their assessments on December 31, 2009 so that the FDIC can appear to have liquidity that it actually doesn’t have thereby creating the illusion of a guarantee that fails the most basic test of legally mandated fitness. Take the time to view this and let’s talk about a new future – one in which transparency and accountability are both expectation and responsibility. Here it is… Download the file of the board meeting on September 29, 2009.

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Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave