After FHLB Gets Paid; FDIC Needs $200 Billion Bailout
The FDIC had $45.2 billion in its coffers as of June 30,
a federal takeover of the nations largest thrift; Washington Mutual, which has assets of $310 billion, could cost taxpayers $24 billion.
Henry Paulson on Sept. 7, the day after he announced the bailout of Fannie and Freddie,
extended a secured credit line to the FHLB to provide an emergency source of funding if needed.
Weak banks will use FHLB advances to avoid discipline from funding markets.
In some cases, that will keep their doors open longer than they otherwise would, all-the-while offloading more and more potential losses onto the FDIC and taxpayers.
Lenders had borrowed a total of $840.6 billion from the FHLB system as of June 30, up 38% from $608 billion a year earlier.
Citigroup, the largest U.S. bank by assets, was the largest borrower this year, with $84.5 billion from the FHLBs as of June 30.
WaMu raised cash by tripling its borrowing from the FHLBs during the last 12-month period to $58.4 billion.
The FDIC can't start recovering assets from a failed bank until after the FHLB collects 100% of its loans.
Hattip To Bloomberg.
a federal takeover of the nations largest thrift; Washington Mutual, which has assets of $310 billion, could cost taxpayers $24 billion.
Henry Paulson on Sept. 7, the day after he announced the bailout of Fannie and Freddie,
extended a secured credit line to the FHLB to provide an emergency source of funding if needed.
Weak banks will use FHLB advances to avoid discipline from funding markets.
In some cases, that will keep their doors open longer than they otherwise would, all-the-while offloading more and more potential losses onto the FDIC and taxpayers.
Lenders had borrowed a total of $840.6 billion from the FHLB system as of June 30, up 38% from $608 billion a year earlier.
Citigroup, the largest U.S. bank by assets, was the largest borrower this year, with $84.5 billion from the FHLBs as of June 30.
WaMu raised cash by tripling its borrowing from the FHLBs during the last 12-month period to $58.4 billion.
The FDIC can't start recovering assets from a failed bank until after the FHLB collects 100% of its loans.
Hattip To Bloomberg.
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