Yep, things are getting better all over:
The Federal Deposit Insurance Corp.’s plan to rebuild its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion.
Bank of America, the biggest U.S. lender by deposits, may owe $3.5 billion under an FDIC proposal that banks prepay three years of premiums, based on the lowest assessment rate multiplied by the bank’s $900 billion in June 30 U.S. deposits.
“This seems like a very hefty amount,” said Tim Yeager, a finance professor at the University of Arkansas and former economist at the Federal Reserve Bank of St. Louis. “The FDIC’s projections of future losses are pretty severe, and they are trying everything they can to avoid tapping the Treasury.”
Two cheers for FDIC for getting the banks to pay rather than dipping in to the taxpayer’s pocket – but the bad news remains: the FDIC is functionally bankrupt at the moment. So many banks have failed in 2009 that the FDIC has simply run out of money to secure the deposits (it probably hasn’t helped that Uncle Sam raised the insured amount to $250,000.00 per deposit). And here’s the worst news: there’s no let up in the bank failures.
Meanwhile, in other news:
More companies in the Chicago area reported business worsened in September, according to the Chicago-NAPM. The Chicago purchasing managers index fell to 46.1% in September from 50.0% in August, the trade group said. Economists were expecting an increase to 52%. The new orders index backtracked to 46.3% from 52.5% in August. The employment index was essentially unchanged at 38.8%. Readings under 50% indicate more firms said business was worsening than said it was improving.
Getty all warm and fuzzy over this? I mean, this has just gotta be part of the Obama plan, right? Biden says its working better than anyone expected, ya know? The really bad news: it was just this sort of news which caused the 2002 stock sell off.
HAT TIP: Mish’s
UPDATE: Stocks slide on economic worries. Talk about perfect timing.
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