While we are all focused on the ‘big bailout’, our representatives are spending or getting ready to spend your money on additional ‘rescue plans’.
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That’s because the FDIC, created in 1934, insures all accounts up to $100,000 at its member banks, and it has never failed to honor a claim. The people to worry about are U.S. taxpayers.
The IndyMac debacle is taking a large bite out of FDIC reserves, and if scores of other banks fail in the year ahead, the fund will be depleted. Taxpayers will have to step in.
The FDIC knows which banks are at risk; it has a watch list with 117 institutions. The agency won’t disclose their names because doing so could cause depositors to panic and pull out all of their funds.
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“It seemed like a lot when we first started pushing this,” says Democratic Sen. Debbie Stabenow of Michigan, one of the bill’s sponsors. “Suddenly, it seems so small.”
There’s more aid coming. This year’s $25 billion is just a down payment. The automakers now plan to ask the government for another $25 billion in loans next year. It’s just spare change, after all.
The drum the feds keep beating is how they expect to make money on the big bailout deal. Does any reasonable taxpayer believe they will ever see a direct ‘refund’ of the increased taxes we will have to pay for these bailouts? Of course not. Any profit realized from the sale of these toxic assets will be hidden or rolled into some other government program. Meanwhile, increased taxes may well push more and more people into financial crisis. It’s infuriating.
Q: How much of your money will these guys spend?
A: All of it.