Here’s a link to the testimony that Bill Isaac had in 2000:

http://financialservices.house.gov/banking/21600isa.htm

Here’s the second question they asked him and his reply:

Please discuss the adequacy of the statutory designated reserve ratio of 1.25%. Is it appropriate in light of subsequent legislative changes such as prompt corrective action, national depositor preference and Gramm-Leach-Bliley?

It is important to understand that there is no deposit insurance “fund.” The FDIC collects premiums (taxes, to be more precise) from banks and thrifts and turns them over to the Treasury. If the FDIC collects more taxes than it spends, the surplus is counted toward a reduction of the federal deficit (or an increase in the surplus).

The Treasury computer duly records the payments made by the FDIC. The money itself, being fungible, is spent on welfare, defense, education, and the like. Should the FDIC need money to handle a failure, the Treasury borrows the funds in the market.

The outlay by the FDIC counts as an increase in the federal deficit. The object in collecting premiums from banks and thrifts is not to build a “fund,” but to ensure that over time the deposit insurance program pays for itself.

The so-called “fund” is simply a running scorecard to determine whether banks and thrifts have paid in more than they have taken out.

FDIC bails em out or lets the american peeps suffer…
which will lead to bank run or what not =)

What can the FDIC do? Or rather, how’s it hurt the bank if the FDIC doesn’t help em out? Sadnessss

I don’t think sooooo

I swear, sometimes I think we just need to start over with everything. The banking industry, even WITH de-regulation, is still the most regulated industry around, but it does absolutely NO GOOD if no one enforces the regulations that are on the books.

How can anyone seriously consider themselves a “public servant” when they didn’t demand the insurance premiums. Where are the checks and balances? Where’s the oversight? Is anyone in charge of anything these days?

And people think the US “can’t” go under, that our bonds will always be good, that this whole mess can be easily solved. We need people with some integrity, but I fear there are too few left that would want their reputations sullied by working in the public sector.

SJ – Yes.

So basically if I understand it correctly, FDIC promises to insure the banks for the past few years w/o anything in return? That’s.. itneresting.