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View Diary: Lawmakers Probe $75T Derivatives Dump by Bank of America (238 comments)

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  •  Is FDIC's exposure limited (0+ / 0-)

    to the amount of deposits in accounts under $250,000? That's still a shitload of money, does anyone know how much?

    •  That's their official limit, but you know who hold (1+ / 0-)
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      desposits larger than that, and it's seldom that FDIC and the Fed haven't made every depositor whole, regardless of legal limits.

    •  What this points to is a collapse in derivatives (2+ / 0-)
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      doingbusinessas, Laconic Lib

            That means the bank would have to take back, or indemnify from its reserves.  The currency, the guaranteed certificates would fly out the door to pay off the last standing creditor in those bonds.  Then the bank is technically insolvent, not just illiquid because the demands are much greater than the Bank's liquidity,  real  assets can handle.

      The FDIC has to step in to make the small account holders, under 250K, whole in this scenario.  This means the Bank uses the FDIC to rescue itself and continue as a bank.  Many of those derivatives are its "own" so the FDIC makes the bank itself a survivor, not a bankrupt in this scenario.

      The first question is, is the fund depleted as it has been by hundreds of failures over the last several years even remotely capable of paying off those accounts all coming due at B of A? Is there enough?

      This is why that bank should have been nationalized already before these shenanigans could get worse than they are at present.

      Wait till the European banking dominos go down. Many of them are linked to US banks, just as Vegas bookies on lopsided bets call on brother banker/bookies all over the country to layoff some of their risks on big action bets.  If I had the leverage, I would call B of A a problem of National Security and terminate its board of directors and senior executives immediately.

            But the Treasury and the Federal Reserve work for the largest bankers and other members in good standing of the 1%. It is the rest of us who have to pay their losses and sacrifice so they don't have to.

      This crap will end very badly and there will be hell to pay.  Remember what happened to French Royalty?
      The tools of American royalty are pretending it cannot happen to them.

      If you think that you and a bunch of other people can just show up on Wall St, camp out and have any effect whatsoever, you're dreaming. *YUP!* h/t Hamden Rice

      by BeeDeeS on Tue Nov 01, 2011 at 12:19:26 PM PDT

      [ Parent ]

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