• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

FDIC clocks 15 bank failures so far in 2010

BmanMcfly

Banned
DP Veteran
Joined
Oct 3, 2008
Messages
12,753
Reaction score
2,321
Gender
Male
Political Leaning
Undisclosed
http://www.reuters.com/article/idUSTRE60T01F20100130
LOS ANGELES (Reuters) - Six more U.S. banks were seized on Friday as regulators continue to close the doors of banks struggling to cope with fallout from the financial crisis.

The FDIC expects 2010 to be a peak for bank failures as a result of the financial crisis. Last year, 140 banks failed, compared to 25 in 2008 and three in 2007.

I thought the economy was improving?

What do you all think of this? How can this truly be resolved?
 
Last edited:
FDIC clocks 15 bank failures so far in 2010 | Reuters




I thought the economy was improving?

What do you all think of this? How can this truly be resolved?

The overall economy is improving. However I understand that there are about 300-400 banks on the fdic "watch list". That is banks teetering on going out of business. It seems that the FDIC wants an orderly unwinding of these banks rather than having 300 get seized over one weekend.

As to how this gets resolved. There seems to be two schools of thought, neither very pleasant. First, what we are doing now seems to be propping up an overleveraged economy with more debt. The hope seems to be that we will stop at some new lower level that we cab sustain and then move forward. This means adding to our debt situation and relies on others to take on our debt at affordable levels.

Another option is for the government including the Fed to stop propping up the economy, and let it find it's natural bottom. This would in all likelihood lead to much more unemplyment and lower housing prices, more defaults etc. So much more short term pain. Not sure that a democracy can be sustained in that type of environment.

So choice #1 seems to get the nod, however the long term costs will be high. No one can say for sure how high. The interesting thing is that much of the " developed" world seems to be in the same mess.

How we resolve this long term is to find a way to increase debt at a slower rate than we grow our economy.
 
Well we should be expecting Rahm Emanuel to pop up out of his hole anytime, to take advantage of a crisis.
 
Many banks are still in big trouble. There will be dozens, if not hundreds more failures before all the slugs are weeded out.
 
The overall economy is improving. However I understand that there are about 300-400 banks on the fdic "watch list". That is banks teetering on going out of business. It seems that the FDIC wants an orderly unwinding of these banks rather than having 300 get seized over one weekend.

The ONLY people that see the economy as an 'improvement' are the same banks that are receiving taxpayer backed bailouts that are mostly being used to provide their CEO's with huge bonuses.

As to how this gets resolved. There seems to be two schools of thought, neither very pleasant. First, what we are doing now seems to be propping up an overleveraged economy with more debt. The hope seems to be that we will stop at some new lower level that we cab sustain and then move forward. This means adding to our debt situation and relies on others to take on our debt at affordable levels.

The ONLY way that this will 'work' is if these debts get cancelled out somehow before they are monetized, or else all that printed money will simply weaken the value of the dollar through high levels of inflation. I mean, last numbers I heard was that the bailout has promised out over 27 trillion dollars of taxpayer money. If you add 27 trillion dollars to our current money supply, how much value is lost on each dollar??

Another option is for the government including the Fed to stop propping up the economy, and let it find it's natural bottom. This would in all likelihood lead to much more unemplyment and lower housing prices, more defaults etc. So much more short term pain. Not sure that a democracy can be sustained in that type of environment.

The problem is that by doing that INITIALLY, we would probably be well on the road to recovery... instead, because of how this has been handled, we're only seeing the tip of the iceburg in this crisis.

So choice #1 seems to get the nod, however the long term costs will be high. No one can say for sure how high. The interesting thing is that much of the " developed" world seems to be in the same mess.

How we resolve this long term is to find a way to increase debt at a slower rate than we grow our economy.

Ya, but just to show how fraudulent the whole idea of the 'bailouts' is... look at the money promised out at taxpayers expense... 27.8 TRILLION dollars was the latest numbers I've heard (about 2-3 months ago). That's pretty well enough money to pay off EVERY mortgage in the US, EVERY credit card bill, EVERY outstanding loan, and STILL have money to spare.

Well we should be expecting Rahm Emanuel to pop up out of his hole anytime, to take advantage of a crisis.

I thought that quote was shoved down the memory hole.... but yes, he did in fact say to the effect that you can't let a good crisis go to waste.
 
Bank failures, i.e. being allowed to fail, could be a healthy sign.
Typically they are absorbed into other banks, and normally this rate is sustainable.

If there is a bank run, the viscious cycle can take *most* banks down. That's...bad. As long as it's at a rate that can be absorbed such that there is no run/panic in a big way, then it's fine...business as usual.

With a shift from extreme bubble debt to something more reasonable, we should see this sort of thing for a while to come until it reaches a new equilibrium. Also, with unemployment so low, it will again keep the debt holders pummeled for a while to come.

There are plenty of people capitalizing on the current situation and that are helping essentially decompose the dead meat into something more useful for the system. People hate on these scavengers, but we all need them, and if you understand how they help everyone, you better love'em. Job numbers would be even slower to improve without them.
 
Last edited:
Back
Top Bottom