District Banker

The Hard Truth, Courtesy of the FDIC

You need to brush up on your Accounting 201, Kid. This is a fairly simple (and common) ledger line, and prepaid expenses like this one are recognized as they are incurred - not paid - as standard practice.

I realize that C will have $1 b less today (not $333mm less) - but this is a balance sheet item, not a cash flow statement.

Further, while this isn't a great deal for the banks (because they will have a zero-yielding asset on their books), at the end of the day it is still better than paying MORE in deposit insurance premiums via special assessments.

Finally, it's not a bad deal for the FDIC because they're essentially getting an interest-free loan/advance.

Finally, this is not an attempt to "hide" the insolvency of the bank industry, but rather give the deposit insurance fund the necessary capital to work through today's bank failures.

I am as negative as anyone on the US Bank & Thrift sector, but this idea is definately not the worst to come out of Washington DC in the last few months.