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

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  •  B of A = Bank of Armageddon? (2+ / 0-)
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    ivorybill, scarvegas

    The FDIC does not guarantee deposits up to $150k, it insures them. And like all insurance policies, while there is the expectation of coverage, there's also a clause in the policy that states, in a sense, "of course if we're out of money we don't have to pay ..."

    I don't think the FDIC is capable of covering very much at all right now -- nowhere near enough to cover for a BofA bankruptcy. But all hell will break loose if the FDIC can't cover the deposits (at least up to the insured $150k). You'll have a run on the banks and the whole house of cards will collapse.

    This is why what is going on with BofA is REALLY bad. There are all kinds of indications that they are failing. B of A is likely to go down in history as the Bank of Armageddon by the time this is all over.

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