As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, March 11, 2009

Big Bank Strikes Again

Seriously, I am so done with these elites.

WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.

Now with 25 banks having failed last year, 17 so far this year, and many more expected in the coming months, the FDIC has proposed large new premiums for banks at the very time when many can least afford to pay. The agency collected $3 billion in the fees last year and has proposed collecting up to $27 billion this year, prompting an outcry from some banks that say it will force them to raise consumer fees and curtail lending.

So for ten YEARS, these banks didn't pay their insurance premiums, secure in the knowledge that they were the masters of the universe and nothing could ever hurt them. Keep in mind that the Asian financial crisis hit right in the middle of that time. But these banksters were invulnerable. But now the FDIC is eating banks left and right, and everybody expects the money just to magically appear in their account.

And I'm not leaving the policymakers off the hook, either. This was clearly a bipartisan swoon, a fealty to rich Wall Street greedheads that shouldn't be bothered with the imposition of insuring their customer's deposits. Congress agreed that there was enough reserves in the fund not to charge banks for ten years. Sheila Bair was, if anything, a hero in this, pleading since before she took over the FDIC that the program needed more capital.

Bair said yesterday that the agency's failure to collect premiums from most banks "was surprising to me and of concern." As a Treasury Department official in 2001, she said, she testified on Capitol Hill about the need to impose the fees, but nothing happened. Congress did not grant the authority for the fees until 2006, just weeks before Bair took over the FDIC. She then used that authority to impose the fees over the objections of some within the banking industry.

"That is five years of very healthy good times in banking that could have been used to build up the reserve," Bair, a former professor at the University of Massachusetts at Amherst, said in an interview. "That is how we find ourselves where we are today. An important lesson going forward is we need to be building up these funds in good times so you can draw down upon them in bad times."

It is astonishing what is being revealed about how much banking interests ran the country for the last 15 years. Now, after taking hundreds of billions of dollars from taxpayers, they're whining about all the burdens the acceptance of public money is placing on them, like executive pay caps and selling corporate jets. Of course, they're not going to give back the money, just whine about it enough so that Congress loosens the reins. And even if they did return a portion of the TARP money they'd just make an end run to grab their corporate welfare through AIG. Because we wouldn't want a crisis on our hands by not paying them out.

So when times are booming, the banks want no regulation and won't even condescend to meet their own financial obligations with the government. When the casino closes up and they're tapped out, they come back for a handout. Which they get, at massive expense without taxpayers sharing in the upside. But don't you dare tell them how they can and can't spend the money. After all, they know best, right?

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