Tag Archives: FDIC

U.S. Banks Being Taken Over Using Chavez-Style Manipulation Part-2

In part 1, we detailed just how Hugo Chavez has effected the complete government takeover of the Venezuelan private sector including banks, farms, food stores, etc. His method of operation is not unlike Barack Obama’s recent onslaught upon the U.S.  private sector, specifically the banks. With the passing of the Dodd-Frank financial reform bill in 2010,  we see that the U.S.  government is closing banks through the FDIC and the Federal Reserve enhanced powers via the Dodd Frank bill, and then giving these banks to leftist crony-capitalists such as George Soros.

Part 2 – FDIC, Obama and Bernanke-Approved Bank Fraud lines pockets of Dell, Paulson and Billionaire Leftist money-manipulator, George Soros. while depleting FDIC funding,thus leaving U.S taxpayers to foot the bill.

(Keep in mind that the FDIC closed 157 banks in 2010 and the current total for 2011 now stands at 90.) 

Indy Mac Bank of California closed down by Feds, then reopens as One West Bank in March 2009.  Keep in mind here that this is JUST ONE Bank here, with 844 banks now listed by the FDIC as being “problematic” in their latest 2011 report. That report should be more aptly be referred to as “The Feds hit list of banks slated for hostile takeover to be given to Obama/Leftist Democrats and crony-capitalists.” First let’s review just what transpired in the Indy Mac Bank takeover and restructuring, that was made perfectly legal by the Dodd-Frank bill.

Mike Shedlock gives us a complete rundown here on just how the U.S. Government has set up the bank takeovers that allow big time leftists such as George Soros to make billions of dollars of profits while leaving the taxpayer holding the bag for billions of dollars in losses through the FDIC. This is a massive transfer of wealth that will also lead to the complete takeover of every bank in the country, if it isn’t stopped. 

Meet IndyMac’s New Owners

Flashback March 20, 2009: IndyMac Bank’s new name: OneWest Bank

The sale of IndyMac Federal Bank was concluded Thursday, and the new owners wasted no time in ditching its tainted name. Starting today, IndyMac is OneWest Bank.

The Pasadena bank’s new owners, organized under OneWest Bank Group, bought the bank’s $20.7 billion in loans and other assets for $16 billion. That includes $9 billion in financing from the Federal Deposit Insurance Corp. and the Federal Home Loan Bank.

The ownership group is led by Steven Mnuchin of Dune Capital Management in New York. The bank’s investors include J. Christopher Flowers,who has specialized in distressed bank purchases, and hedge fund operators George Soros and John Paulson.


On February 20, 2010, the Los Angeles Times reported OneWest bank profit: $1.6 billion:

The billionaires’ club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender — more than they invested less than a year ago.

Yet under the sale agreement, the federal deposit insurance fund still could lose nearly $11 billion on bad loans that the Pasadena institution made before it was sold last March and renamed OneWest Bank.

In taking over IndyMac’s assets, the investor group, led by Steven Mnuchin of Dune Capital Management, put up $1.55 billion to revitalize the bank. Other investors included hedge-fund operators George Soros and John Paulson, bank buyout expert J. Christopher Flowers and computer mogul Michael S. Dell.

OneWest’s financial results were filed with regulators Friday. Regulators and the investors declined to comment on the profit. ( Never mind asking these Obama crony-capitalists as to why they should make $1.5 billion in profits, while the FDIC [as in the taxpayers] takes $11 billion in losses)

And now we see this headline from Reuters:  FDIC may borrow money from treasury.  ” The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said”  With $12 billion dollars in losses with the closing of Indy Mac ( now One West Bank) is it any wonder the FDIC fund is broke?  How are  Soros,  Paulson and Dell allowed to make a billion and a half dollars from the takeover of Indy Mac Bank in 2010 alone, while ignoring the losses? This is a massive transfer of wealth being manipulated by the Obama-Bernanke-Geitner-Soros consortium, where banks end up being owned by assorted leftists and crony-capitalists of the Obama regime,  eerily similar to what Mr. Hugo Chavez is doing in forming his Communist collective in Venezuela. This widespread power grab in taking over banks and putting them in the hands of  the likes of billionaire currency manipulators and finance fraudsters like George Soros has very deep ramifications for the public. As of right now, people who have money in FDIC insured banks have no guarantee that the money is actually in that bank, as witnessed in the Reuters article above: ” With a rise in the number of troubled banks, the FDIC’s Deposit Insurance Fund used to repay insured deposits at failed banks has been drained.”

Need a home or business loan in the near future?  It is going to be pricey, to the point of being unattainable for many Americans struggling during this Obama-recession. What if government-connected leftists like Soros have the final say in just who gets a bank loan?  The Indy Mac bank debacle described above  is just one example of the massive transfer of wealth and influence over our banking sector being perpetuated through the Dodd-Frank bill today. There are currently 844 banks on the problematic bank list at the FDIC.  The FDIC fund is broke. Meanwhile Soros and company are making billions off of failed banks such as Indy Mac. And right now Congress is trying to stall Barack Obama’s newest czar appointee, Mr. Richard Corday.  His position? Chief enforcer of the Dodd-Frank financial bureaucracy!     2012 just can’t get here fast enough!

Part 1 here.





Rebuilding a House of Cards

Many of us have done it.  We’ve gathered a few decks of cards, built it up as high as we could, then watched it fall to the ground.  Of course, we would then re-build just a little higher only to have it also collapse due to its unsupportable architecture.  The only difference being that the second, larger card house, made for a much larger mess when it collapsed.

In 2009, the government is rebuilding the poorly-supported house-of-cards that caused the current recession, and of course, building it bigger.

By over-extending loans to those that could not afford them at housing prices that were unrealistic, the government put the entire economy at-risk.  In order to even come close to servicing the risky loans the government regulators forced upon bank, they had to re-package them into complicated mortgage-backed securities.

These risky loans actually only achieved one thing – creating a bubble in the housing market.  The prices of houses became artificially inflated due to unsupportable demand.  When all those loans defaulted, the financial institutions that held the notes also collapsed.  Then, a correction started to occur.  A naturally-occurring oscillation in the market, but the government could not let that happen.  Bring on… bubble part 2: going for broke.

In a post on Hot Air we see that in August, we watched as sales of existing homes drop by 2.7%.  Experts were expecting an increase.  Due to the fact that 30% of all home sales this year were by first-time home buyers, the National Association of Realtors has begun a campaign designed to influence congress to put more taxpayer subsidies into the housing market.  They correctly believe that once the $8,000-$15,000 tax credit disappears, so will the buyers.  But by stopping it, they are only delaying and magnifying the inevitable – the true correction of the market.  Those subsidies basically inflate the market by the value of the subsidy.  When the subsidy goes, those houses suddenly correct to their actual value – the government creates another wave of people who will be upside-down in their mortgages.

We can already see what happens when the government issues its short-term subsidy/stimulus programs.  Cash for clunkers artificially increased durable goods manufacturing in July.  August tells an entirely different story.  The manufacturing sector is no correcting longer and deeper than it might have if the government had just stayed out.  The 2.4% reduction in durable goods orders is right after the 4.8% increase due to the governments car program.

The FDIC is already holding dangerously small reserves and is considering borrowing from taxpayers to survive the bank bailouts that are already occurring.  The new round of defaults that are incoming will force that action.  More liquidity will be needed in the economy, more money will get “created”, and inflation will result.

In short, we have more vulnerable home owners with upside-down mortgages, a declining manufacturing sector, rising unemployment, an FDIC teetering on the brink, and the knowledge that at some point the subsidies must end or hyper-inflation will take hold.

If we put all of this together, it’s easy to see that we are rebuilding the same house of cards that got us here.  This time we’ve decided to build it higher, in the middle of a storm, with flimsy cards.  Prepare to pick-up the mess.

FDIC May Resort to Treasury Borrowing to Avoid Collapse

On September 18th,  the FDIC announced two more bank closures that would require funds from the insurance corporation in-order-to protect depositor’s money.  This month alone there have been ten bank failures and the month isn’t over yet.  There were fifteen closures in August and  at the current pace, it’s entirely possible that September will have between 14 and 20 closures. The second quarter’s failure rate was the fastest since the savings and loan crisis in the early 1990’s, and it’s not slowing down yet.

FDIC Reserve Ratio
While the fact that banks are failing is disconcerting, the real alarm that is silently going off is that the FDIC is running out of money to cover the deposits of banking customers. The FDIC is required by law to keep an amount equal to 1.25% of covered deposits on-hand.  Currently, the insurance fund contains a ration of less than .22%.

Despite the fact that at the end of June financial institutions were forced to pay a special assessment of 5-10 basis points of deposits (not including their mandatory reserves), the drain on the the insurance fund continued.

Bank failures are cited as the major reason for the collapse of the fund, but looking ahead, there is growing concern over banks that are teetering on the edge of collapse.  The number of “problem institutions” is increasing and the rate-of-increase is also quickening. Problem institutions are not yet failed, but have financials that show that they are in-danger of failing soon. In fact, roughly 13% of banks on the problem list have historically failed.

The deposit fund lost $2.6 billion in the second quarter which leaves just over ten billion dollars available to cover deposits in failed banks. At the current rate, there is just over a year’s worth of coverage in the fund, but with the rate increasing, it is more-realistic that it will run out of money in less than a year.

The FDIC is considering tapping U.S. Treasury to re-stock the fund. On Friday, Sheila Bair, FDIC chairman, indicated that the FDIC may consider borrowing money from the Treasury when it meets at the end of this month. The FDIC could borrow up to $100 billion under the Helping Families Save Their Homes Act. Congress also has the option of allowing the FDIC to have access of up to $400 billion more by temporarily increasing the ceiling of that line-of-credit.

The only other option left to the insurer is to increase fees or levy additional assessments against financial institutions. Banks argue that this might raise the risk of failures for institutions on the edge. Those banks need access to as much liquidity as possible to work through the recession. The debate over who should replenish the fund is then between taxpayers and financial institutions.

Barney Frank, Chairman of the House Financial Services Committee believes that the FDIC should go straight for the Treasury loan. While this reduces stress on the banking industry, it is more “money from nowhere” ending up in the economy. The Treasury money is simply money that the Fed “printed” to buy Treasury Securities. That liquidity would then be put into the FDIC. We would be propping up our banking system with little more than thin air and increasing the risk that we will head into a severe bought of inflation reminiscent of the 1970’s.

See Also: Inflation and How it May Affect You