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Sheila Bair, head of the Federal Deposit Insurance Corporation (FDIC), is working hard to reassure everyone that her banks, all 8,305 of them, are safe. Repeating her familiar mantra Wednesday on the CBS Morning Show, Bair said of FDIC-protected accounts, "Nobody's ever lost a penny of insured deposits...
...Bair had good reason to be out on the stump. She knew that on Thursday the FDIC would release its report on the health of the country's savings institutions. Now the report is out, and you can sum up what it says about American banks in one word: sick. "There is no question that this is one of the most difficult periods we have encountered during the FDIC's 75 years of operation," said Bair, commenting on the report. (See pictures of the Top 10 scared traders...
...least, that's one way of looking at it. You could also say bank nationalization began in 1984 when regulators decided that Continental Illinois, then the nation's seventh largest bank, was too big to fail and put the Federal Deposit Insurance Corporation (FDIC) in charge of it. Or maybe the crucial moment came in 1933 when Congress decreed that small depositors should be protected from bank failures by the FDIC. Or in 1913 when Congress created the Federal Reserve System to halt banking panics and regulate the money supply. (See pictures of the stock market crash...
...FDIC has taken over--nationalized, if you will--14 smallish banks so far this year. The tough questions have to do with the banking giants. Regulators deem them too big to be sold off or shut down according to standard FDIC procedures without risking another market breakdown like the one that followed the collapse of Lehman Brothers. The Obama Administration has already said it will buy shares in banks that need more help, and is negotiating a deal that would give it a big minority stake in Citigroup. But it has so far dismissed suggestions that it should take full...
...JPMorgan Chase Loan losses: JPMorgan largely avoided the troubled subprime-lending game. Not so Washington Mutual, which JPMorgan acquired in 2008 in an FDIC-brokered deal. With housing prices still falling, many of those WaMu loans are going unpaid. JPMorgan has $105 billion in credit card loans, which could cost the company some $18 billion. And there is an additional $262 billion in corporate and commercial loans, which, according to Roubini, could tally $26 billion more in red ink. All told, it's a $97 billion loss for JPMorgan...