No More Bailout Money for Failed Banks

September 22, 2009

Phot by sVilen001

Phot by sVilen001

The Federal Deposit Insurance Corporation is seeking private equity firms to buy out troubled banks so as not to put an unnecessary strain on their budget.

Many more banks are slated to fail in the coming months because of defaults on real estate loans. It will not be easy to find private equity buyers as many are reluctant to take on the losses of these failed banks.

Out of the seventy-seven banks that have been closed, sixty-nine buyers have been found. The danger of exhausting the FDIC’s fund has caused Walter Buffet to comment on the need for the U.S. to cut back on the amounts of money it has been pumping into the economy to rescue it from economic disaster.

The U.S. spent $180.7 billion in July 2009, the most it has ever spent in one month in U.S. history. If the FDIC’s funding is exhausted, the U.S. will go to taxpayers to finance the FDIC’s loan sales and short-term obligations.

In view of France’s experience in establishing a bank and making John Law the owner, the U.S. must be mindful of not repeating France’s history and putting unscrupulous individuals in charge of these banks.

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FDIC Seeking Private Investors

August 25, 2009

Photo by I Busca

Photo by I Busca

With fewer larger banks unwilling to purchase troubled banks, the FDIC is now looking to private investors to bail out these banks. Private investors recently extended funds to CIT Bank to keep it from bankruptcy filings.

Since private investors tend to cut costs by eliminating jobs, unions are against private investors getting involved with acquiring distressed banks.

The involvement of private investors would relieve the U.S. of their intervention in some of the failed banks earlier in this economic crisis. Warren Buffet recently made a statement that the U.S. “must address the massive amounts of monetary medicine that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency.”

The federal deficit reached an all-time monthly high of $180.7 billion for the month of July 2009.