Economic Recovery Measures
Yesterday, the FDIC reported that the deposit insurance fund fell below zero for the first time since the third quarter of 1992 (during the savings-and-loan crisis). The fund balance, as of the end of the third quarter, stands at -$8.2 billion, including the more than $38 billion set aside for projected losses from bank failures over the coming year.
Worry about the government’s investment in AIG has prompted some federal officials to call for easing the restrictions on pay at AIG for 2010, the Wall Street Journal reported.
On Friday evening, the FDIC reported that it has taken over an additional bank (Commerce Bank of Southwest Florida) for a cost to the FDIC of around $24 million. This brings the total number of failed banks in 2009 to 124. Total deposits of all failed banks now equal $115.5 billion for 2009 and over $349 billion since the beginning of 2008, all at an estimated cost to the FDIC of just under $54 billion.
A number of very interesting and relevant government reports have come out this week. Check them out:
UPDATE: Treasury Secretary Geithner testified on Nov. 19 before the Joint Economic Committee, stating that "we are winding [TARP] down and will close it as soon as we can." Secreatry Geithner also stated that the Treasury will use "substantial resources" from remaining TARP cash to pay down some of the debt (see our commentary here for why such a statement is a bit misleading).
Several executives from General Electric and Bank of America Merrill Lynch said early this week in a BofA Merrill Lynch webcast that they see Congress approving another stimulus bill sometime next year. They argued that governments and emerging markets will lead a global economic recovery.
Here are the highlights from this weekend’s editorials on fiscal and budget policy:
On Friday evening, the FDIC reported that it has taken over an additional three banks (Pacific Coast National Bank, Orion Bank, Century Bank) for a cost to the FDIC of around $1 billion. This brings the total number of failed banks in 2009 to 123. Total deposits of all failed banks now equal $115 billion for 2009 and over $349 billion since the beginning of 2008, all at an estimated cost to the FDIC of just under $54 billion.
The FDIC has just adopted a rule to require banks to pay at the end of 2009 the amount they would owe the FDIC for insurance premiums over the next three years. This rule change will collect $45 billion from banks to help shore-up the severely depleted deposit insurance fund. CRFB reported on this potential rule change back in early October (click here to see our original post).
This morning, a Wall Street Journal article reported that the White House intends to use some of the remaining TARP cash for deficit reduction, while also keeping some funds available for emergencies.