pcyhuang

FDIC Guarantee: More Toxic Than the Target Itself

>most important of all is the fact that, in its present form, an FDIC guarantee will create more problems than it is targeted to solve. Primarily, the FDIC-backed paper will not be "fully, irrevocably and unconditionally" guaranteed by the US government. Rather, the Interim Rule refers to repayments conditioned by the domestic bankruptcy process, with no specific timing parameters. (The Comment Period on the Interim Rule expired on Thursday.)


To relieve the pressure on the FDIC in regard to its FDIC-backed paper, what the government needs to do is first to restore the credit-rating of the insurers in the private sector -- especially the monoliners.