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Why Is FDIC Speaking On Behalf Of Congress On Consumer Protection Agency?



“In an interview with The Associated Press, FDIC Chairman Sheila Bair said Congress would not go along with expanding the Federal Reserve's authority to regulate large financial companies or with giving a new consumer protection agency enforcement powers over banks.”
 
So FDIC spoke for Congress too?
 
How did Bair know our representatives wouldn't vote for a consumer protection agency? 
 
In fact, why should our elected representatives not favor the creation of such an agency to “ensure our currently irresponsible regulators actually did their jobs?”

When they didn't, hard-working Americans were the ones paying for it, such as the farmers in Colorado.  New Frontier Bank failed because OTS did not take a tough stand and prevent the bank from making risky loans.  As a result, responsible farmers such as Gary Teague, who had never missed a loan payment, was forced to lay off "100 employees" because he was given a limited amount of time to find new financing by the FDIC.  Many faced liquidation as their loans were auctioned off.  Worse, they were mistreated by the FDIC during its management of receiverships, like other taxpayers who also experienced bank failures across the United States.


www.denverpost.com/headlines/ci_13148011
metrospirit.com/index.php

Without that consumer protection agency, things would only get worse and worse for average consumers.  Forget what Sheila Bair told you about FDIC being funded by bank premiums.  It had no money and would rebuild its fund by either charging banks more "special assessment fees" (that meant YOU because the banks would most likely transfer that charge to YOU) or borrow from the Treasury (that meant ALSO YOU and WORSE YOUR KIDS because treasury bills were debt that would need to be paid off eventually).

"Tresasury Insanity In Support of Grift

*U.S. TREASURY TO AUCTION $27 BILLION IN 52-WEEK BILLS
*U.S. TREASURY TO AUCTION $42 BILLION IN TWO-YEAR NOTES...
*U.S. TREASURY TO AUCTION $39 BILLION IN FIVE-YEAR NOTES"
market-ticker.denninger.net/archives/1356-Treasury-Insanity-In-Support-Of-Grift.html

Take a look at the list of failed institutions and their “supervisors” on the FDIC website.  This list clearly demonstrated that the Fed, OCC, OTS, AND FDIC all failed; they had the responsibility and power to prevent banks from taking excessive risks but did barely anything to protect the innoncent American taxpayers.
http://www2.fdic.gov/idasp/main.asp

Now check out these "least-cost solutions" to the FDIC.  How could all these banks have lost so much of their asset value while being "supervised and regulated?"
www.mybudget360.com/fdic-insures-47-trillion-in-deposits-with-a-136-billion-deposit-insurance-fund-this-is-like-going-into-a-hurricane-with-a-99-cent-store-umbrella/


 
It also remained questionable as to the amount of time FDIC took per bank and what criteria the agency used to reach its least-cost solutions.  It spent just a few hours/days finding the best value for Wamu while months for BankUnited.  It infamously wiped out Wamu bondholders but not Wachovia's.  Here were two more examples involving First Bank of Idaho and Waterford Village Bank :

"The FDIC says they will lose $191 million because of what has happened but if they'd waited a few weeks it never had to happen"
www.newwest.net/city/article/first_bank_of_id_board_member_takes_case_to_dc/C108/L108/

"The Canadian Investor who tried to buy Waterford Village Bank before it failed fired off a letter to the [FDIC], blasting regulators for seizing the bank without giving him a chance to save it."
www.buffalonews.com/145/story/751114.html

There had been plenty of criticism by our mainstream media on the BBC (big boys club) of Wall Street.  Unfortunately, many press outlets continued to shower Sheila Bair with praises, touting her as a champion for taxpayers and advocating the expansion of FDIC power under her jurisdiction.

Why should we “gotta love Sheila Bair?”
 
Please explain to me how she had been a better regulator than John Dugan of OCC or John Reich of OTS when several banks under FDIC supervision also failed.  This was part of the first page of the latest failed bank list on the FDIC website as of July 7, 2009; 6 out of 9 were under its supervision*NM = commercial bank, state charter and Fed nonmember, supervised bythe FDIC*
 
Mirae Bank (NYSE:NM) June 26, 2009
MetroPacific Bank (NM)
Horizon Bank (NM)
Neighborhood Community Bank
Community Bank of West Georgia
First National Bank of Anthony
Cooperative Bank (NM)
Southern Community Bank (NM)
Bank of Lincolnwood (NM)
 
In addition, many negative reports faulting FDIC and criticizing its supervisory effort had been released by OIG.
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/05/AR2009050504018.html

Sheila Bair had been running FDIC like AIG, backing trillions with very little money.
www.econblog.org/2009/04/turning-fdic-into-aig.html

It was no surprise that FDIC became broke, and no, it was NOT Tim Geithner's fault.

In fact, since June 2008, its DIF ratio had been below the mandatory minimum but Sheila Bair, instead of boosting FDIC capital specifically for deposit protection, decided to risk its meager reserve to sponsor TLGP and PPIP.

Just where on the FDIC mandate did it say that bond guarantee was one of the agency's responsibilities?  Also, how was it fair that FDIC collected special assessment fees from smaller but prudent banks so it could back bonds for institutions of its choice?

The current reserve ratio was at a pathetic "0.014%."  This meant you could get back $0.014 for every $100 you saved in a FDIC-insured account.  Now suppose one of these banks with FDIC backed bonds went under, was Sheila Bair going to pay off those bondholders rather than save the money for its most important mission: protecting insured depositors of the next failed bank?
globaleconomicanalysis.blogspot.com/2009/08/as-of-friday-august-14-2009-fdic-is.html
1.bp.blogspot.com/_nSTO-vZpSgc/SoYymWazPNI/AAAAAAAAGpY/adaz4n4OFVg/s1600-h/FDIC+Reserve+Ratio.png

[FDIC+Reserve+Ratio.png]

While most focused their attention on TARP and Paulson on the bonus dispute, it was actually FDIC's bond guarantee program that played a significant role in helping big banks continue their generous bonus handout.


chart_debt.gif
money.cnn.com/2009/05/12/news/fdic.guarantee.fortune/index.htm
 

Here was a detailed 2008 bonus pool chart released by New York Attorny General Andrew Cuomo:


business.theatlantic.com/2009/07/post_3.php


It was laughable that Bair boasted TLGP as a "big moneymaker" because FDIC collected a mere $7 billion in fees.  That was about one-third of the $22 billion bond guarantee for Goldman Sachs and a little more than half of the $11.4 billion GS had set aside for its bonus pool thus far in 2009.
seattletimes.nwsource.com/html/businesstechnology/2009471723_goldmanearn15.html

Seriously, it was time to end Sheila Bair's recklessness and thirst for power.  FDIC was now using tax dollars, our hard-earned money.  It was no longer being funded by "bank premiums."

She must be held accountable for her statements and actions. 

How did she "support reigning in 'eye-popping' U.S. Banker Compensation" when her agency indirectly helped banks give out bonuses via TLGP?
www.bloomberg.com/apps/news

How did she plan to "end too-big-to fail" when she sold Wamu to make JP Morgan bigger, refused to help Wachovia stay independent, made rules that basically killed any PE firm interests, endangered smaller but responsible banks with outrageously high assessment fees, and preferred other banks to buy banks?

How would she explain to pension funds and taxpayers that legacy bank assets would "likely... generate a 'healthy' profit" when "in April, the average auction clearing price on the 331 loans the FDIC sold in January and February was 49.3%... with the average price dropping even more: the latest being at 46.4%?"




www.reuters.com/article/ousiv/idUSTRE52A7PT20090311
zerohedge.blogspot.com/2009/05/fdic-sold-470-million-commercial-loans.html


Why seized and sold Wamu (with a Tier I Capital Ratio of 8.4% and a TCE ratio of 7.8%) in a just few hours but not "dead banks" such as Guaranty and Corus who on their own reported they were "critically undercapitalized," with "negative Tier Capital Ratio?"
www.chrismartenson.com/blog/fdic-broke-now-what/25274
market-ticker.denninger.net/archives/1335-One-Of-Three-Down;-Is-The-FDIC-Still-Solvent.html

Why guaranteed Morgan Stanely bonds in Hong Kong dollars and not CIT's?
www.bloomberg.com/apps/news

I encouraged CIT investors and clients to take a look at the following paper and chart.  Please see for yourselves how FDIC hurt your company twice, first by destroying the bond market, and then by refusing to help guarantee your bond.  
newyorkfed.org/research/conference/2009/cblt/interbank_market_HHH_jan09.pdf
www.creditwritedowns.com/2008/12/chart-of-the-day-excess-reserves.html





Contradictions after contradictions.

Risks after risks.

The bad bank idea was back and Congress must stop FDIC from using our hard-earned tax dollars to buy toxic assets.
money.cnn.com/2009/08/18/news/banks.buyers.fortune/

Problems caused by regulatory failures should not be rectified at the expense of American taxpayers, via either job loss or tax money.  It was wrong to use our tax money to share in losses in bank sales and buy TOXIC assets at BLOATED value so banks can gift bonuses, because the Fed, OCC, OTS, and FDIC all failed or were too busy working on other things not mandated by their charter to conduct proper examination, supervision, and management of receivership on financial institutions.

It was disturbing to see that "of the 77 failures in 2009, the F.D.I.C. could not even find a bank to acquire eight of them."  It was unethical that "the agency signed loss-sharing agreements on 41," not following "Prompt Corrective Action" while overpaying for the junk assets marked up by the banks themselves.
www.nytimes.com/2009/08/21/business/21norris.html
market-ticker.denninger.net/archives/1336-Treasury,-FDIC-And-More-How-Many-Lies.html

Why should CIT small business owners get their credit line cut only to pay tax and watch Goldman Sachs mark more than $11 billion for bonus in 2009, with FDIC backing $21 billion in bonds?

Why should former Wamu employess lose their jobs and 401K's only to pay tax and watch JP Morgan pay out $7.8 billion in bonus last year?  

Thanks to FDIC's generous $40 billion bond guarantee, the bank was able to return $25 billion of TARP money, got Wamu for free ($1.9 billion), and still had plenty of dough leftover for fancy gigs like building a premier hangar for its private jets.


JPMorgan Chase Wins Lease for Corporate Jet Hangar
www.washingtontimes.com/news/2009/jul/31/doing-well-regardless/
abcnews.go.com/Blotter/WallStreet/story

It was time for a change.  Please amend and mark the billions you gave FDIC for ONLY DEPOSIT PROTECTION and create that consumer protection agency NOW.

*imho*