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FDIC: Time For Some Checks and Balances

Updated 4/18/2009

I am not a financial or economics expert, but I know investments in stocks, bonds, and even mutual funds are risky.  However, no government agency has the right to show contempt to the safety of our deposits and savings that we have earned from working hard all our lives.  FDIC has made several irresponsible and inconsistent decisions and taken actions detrimental to the US financial market today and I want to explain why.

What is FDIC?  "The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress that maintains the stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships... The FDIC treats all employees, insured financial institutions, and other stakeholders with impartiality and mutual respect."

I came across an analytical paper recently, and this part caught my attention**. The authors, who work at the financial research division in European Central Bank (ECB), wrote:                                                                

"The amounts deposited with the ECB rise from a daily average of 0.09 billion euros in the week starting September 1, 2008 to a daily average of 169.41 billion in the week of September 29, 2008... The amounts deposited with the ECB start rising after the collapse of Washington Mutual when the crisis spreads outside the investment banking realm."

On the one hand you have the Fed and the Treasury attempting to "spur lending and boost the economy," while on the other you have FDIC exacerbating "liquidity hoarding [that led] to [an international] market breakdown" because of its seizure of Wamu.  In my opinion, a government agency should not offset the main goal of our administration as it executes its mission.  Further, it should minimize systemic risk with irreversible consequences that may violate our rights and threaten the US Constitution.

I'm a Wamu shareholder so let's begin with this "biggest bank failure" in history.  Please, however, continue reading the rest of my article as a shareholder to ANY bank.  This FDIC decision to fire sell Wamu was pivotal, drastically reducing investor confidence and demoralizing the entire financial sector.

Check out the following chart and note the biggest recent drop in DJIA occurred around the time FDIC and JP Morgan rescued Wamu:

According to Sheila Bair, Wamu was facing intense liquidity pressure. OTS and FDIC decided to seize the bank and sell it to JP Morgan within hours so deposits could be saved. In addition, this was done on a Thursday instead of the normal Friday because there was a press leak and Bair did not want to have a bank run.

But how did FDIC determine Wamu was in so much trouble that this seizure had to happen immediately? Wamu wasn't even on its problem bank list.

Besides, "Washington Mutual had a Tier 1 capital ratio of 8.4 percent on Sept. 30, well above the 6 percent threshold that regulators use to classify a bank as well capitalized. JPMorgan Chase (NYSE: JPM), which purchased WaMu had a similar ratio of 8.9 percent. Wachovia... had a capital ratio of 7.5 percent as of Sept. 30, compared to Wells Fargo’s 8.6 percent. And National City had an 11 percent capitalratio, and yet had to sell out to PNC Financial Services (NYSE: PNC). By comparison, Bank of America (NYSE: BAC), considered one of the bedrock financial institutions, had a capital ratio at the end of the third quarter of 7.6 percent."

In addition, "Washington Mutual, which already essentially 'went under' by nature of forced acquisition, has a tangible book/asset ratio of 3.66. And that number is on the higher end of the scale/list.  So, the thinking would be that many of the institutions with ratios lower than that could potentially be in trouble as well.

The US banks & their tangible book/asset ratios:

BB&T (BBT) 6.86
PNC (PNC) 5.87
Northern Trust (NTRS) 5.51
Goldman Sachs (GS) 4.86
Morgan Stanley (MS) 4.35
JPMorgan (JPM) 3.83
Washington Mutual (WM) 3.66
Wells Fargo (WFC) 3.50
Merrill Lynch (MER) 2.84
Bank of America (BAC) 2.83
US Bancorp (USB) 2.74
Lehman Brothers (LEHMQ.PK) 2.39
Citigroup (C) 1.52"

Most importantly, Washington Mutual Holding, Wamu's parent company, had over $4 billion in cash. Is that not enough to keep Wamu afloat for a few more days as our Congress voted on TARP?

Without a doubt Wamu management was corrupt and made many poor and shady business decisions, contributing significantly to its downfall and is currently being investigated by the FBI.  As the mortgage crisis became more drastic, it engaged Goldman Sachs to shop for a buyer.  Here was the strange thing, less than 2 weeks before FDIC seized Wamu Goldman actually upgraded Wamu; it "took the thrift off its "Americas Sell" list and said even though losses "continue to deliver body blows to the bank, the equity base is
absorbing the pain.""

Could Wamu's books have deteriorated so much in such a short time, or did Goldman miscalculate its recommendation?

Things got even worse after this seizure because FDIC basically killed the bond market.

"Washington Mutual Inc. bondholders are likely to lose most of their money after the thrift was seized in the largest U.S. bank failure in history... It seems that WaMu's major debt holders have been stranded by regulatory intervention... The deal structure seems to be unprecedented in that it excludes bondholders at the holdco and bank levels from the major assets and liabilities of the operating bank.''"

Investors were scared and it became nearly impossible for banks to raise capital via selling bonds.  Wachovia topped the list as the first casualty from this ill-conceived FDIC action.

"The first thing that happened this morning: credit-default swaps blew out on Wachovia... Wachovia bondholders are wondering if they're next," Sauter said. Translation: options on Wachovia bonds showed confidence in the securities had collapsed. "Wachovia is on the ropes now because their financing costs are going through the roof. It's an absolute reaction against how FDIC sold WaMu," Sauter said.""

"At 4 a.m., Bair told Steel that the FDIC had chosen Citi to buy most of its operations, turning down a Wachovia proposal to stay independent with government help... FDIC pushed both sides to make an announcement on Monday, Sept. 28, before the markets opened or Wachovia would be seized."  This wrongful act of force by FDIC was later confirmed in a sworn affidavit.  WSJ reported “Wachovia was under tremendous pressure from Citi and the regulators… The Company’s advisors and I told the board that we believed that unless a definitive merger agreement was signed with either Citigroup or Wells Fargo by the end of the day Friday, October 3, that the FDIC was prepared to place Wachovia’s banking subsidiaries into receivership."

Wachovia's plea to stay independent with government assistance was rejected.  Wells Fargo was interested in Wachovia but needed more time to consider because it "' couldn't follow through under the compressed
timetable to acquire Wachovia without substantial government assistance.'"  "[T]he Fed had taken over because the FDIC is not the primary regulator of Citi and Wells Fargo... The FDIC really jumped the gun on getting a deal done and this whole fight between the banks could have been completely avoided."

Millions of investments vaporized within a few hours after this deal was announced because FDIC failed to coordinate with SEC to halt WB stock from trading.  "Wachovia saw its share price plummet 90% to
below 70¢ when Wall Street opened today. Federal regulators helped to arrange a deal in which Citigroup will take on $42 billion (£23 billion) of losses on a $312 billion pool of loans held by Wachovia, which has a portfolio of risky mortgages."

Here was another questionable act by Sheila Bair and her agency.  How did FDIC determine Citigroup was strong enough to rescue Wachovia?  What troubled me even more here was the fact that very few journalists or
government officials confronted her about this.  This choice made zero sense because Citigroup itself needed a huge bailout just a month later.

"Under the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses in that portfolio. After that, three government agencies -- the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. -- will take on any additional losses... In addition, the Treasury Department also will inject $20 billion of fresh capital... on top of the $25 billion infusion that Citigroup recently received [from TARP]."

Bair had boasted that the deal between Wamu and JP Morgan would "not cost taxpayers a dime."

Yet in this next transaction between Wachovia and Citigroup she changed her mind and decided it was reasonable for taxpayers to absorb over $200 billion in losses.

Since then, FDIC moved quickly and began seizing troubled banks one after another. It also started backing bank bonds because “It would be very costly” for banks to issue the debt without the guarantee." “Bank of America Corp., Goldman Sachs Group Inc. and the financing arm of General Electric Co. began using the FDIC’s Temporary Liquidity Guarantee Program."  Such guarantee by FDIC even extended overseas:

"Morgan Stanley Sells FDIC-Backed Bonds in Hong Kong Dollars"

Now why was FDIC helping Morgan Stanley and Goldman Sachs selling bonds?  "Our Justice Department waived the five day antitrust waiting period" and instantly allowed these "two investment banks to become bank holding companies."  I doubt MS and GS have paid ANY premium to FDIC before September and yet they have received more help from our government to survive this crisis than Wamu and Wachovia, who couldn't even get on the list to protect itself from naked short selling in July and assistance to stay independent, respectively.

To summarize, FDIC wiped out Wamu bondholders, destroyed the bond market and drastically weakened Wachovia, but then turned around and started backing bonds.  "It has helped companies... borrow more than $336 billion through the end of March, by guaranteeing to repay investors if the firms defaulted." 

The latest "COP report reiterated that in either a receivership or conservatorship, the FDIC can remove failed managers from these institutions, as well as sell assets at current market value, which would raise funds and remove bad assets from the bank’s balance sheet... The process has worked in the past... without consumer panic... because of the FDIC’s long-standing reputation as a conservator. The liquidation method has its drawbacks... Some investors would nearly always be wiped out... This is a harsh outcome, but the investors also reaped profits during the good times."

The question here is, even if shareholders were wiped out, did FDIC seek fair deals for Wamu and Wachovia?  Did FDIC "sell assets at current market value" for these banks?  Did FDIC "maintains the stability and public confidence in the nation’s financial system" by committing itself to help solve problems that arose with its actions, or did FDIC just leave the mess?

It was quite evident not for Wachovia, because Wells Fargo ended up pay $7 per share while in FDIC's original rescue plan, Citigroup was going to pay $1 per share with our government taking over $200 billion in loss guarantee.

Washington Mutual Holding Inc also doesn't think so.  The parent company of Wamu recently filed a lawsuit against "FDIC for improperly sold WaMu's banking assets to JPMorgan Chase for $1.9 billion, rather than conducting a "straight liquidation" that could have produced more money for creditors ― including the holding company."

As if FDIC doesn't have its hands full, Sheila Bair and her agency spent time devising a loan modification plan to share losses and pushed hard to get that program implemented.

"FDIC Chair Sheila Bair... outlined her ballyhooed plan to prevent an estimated 1.5 million foreclosures by the end of 2009. She plans to accomplish this feat by modifying more than two million loans at what she estimates would be a taxpayer cost of $24 billion... FDIC wants to offer private loan servicers a new incentive to modify troubled loans... FDIC would pay servicers $1,000 for every loan they modify, and taxpayers will share the losses if loans re-default... the White House estimates Ms. Bair's plan could cost as much as $70 billion next year -- not $24 billion"

Since when did loan modification become part of FDIC's responsibility?  Furthermore, was this program fair to all homeowners or taxpayers?  Was her plan even effective?  Not according to this article:

"Foreclosure filings in the U.S. climbed 30 percent in February from a year earlier as the worsening economy thwarted efforts by the government and lenders to prevent homeowners from losing property, RealtyTrac Inc. said."

Or this one:
"Aid to Borrowers Not Preventing Rising Delinquency... More Help but More Defaults, Report Say"

Or this one:
"Revised mortgage terms fail to curb defaults... Report shows most loan modifications don't lower payments. Delinquencies among prime borrowers soar... Bair, a leading proponent of lowering loan payments to combat foreclosures and the damage they inflict on the economy, said many banks and loan servicers continued to provide only temporary relief to borrowers... Produced by the Treasury Department's bank regulators, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, the report analyzed mortgages serviced by 13 large financial institutions, representing about two-thirds of all the outstanding home loans in the country... The companies included such first-round recipients of the government's bank bailout funds as Bank of America, Wells Fargo, Citigroup and JPMorgan Chase, which collectively have received $145 billion in government money.",0,4466775.story

In the meantime, as FDIC seeks to expand its authority and involvement in various programs, towns across the US suffered as a result of continuous bank seizures and more importantly, the painfully slow followup:

In Galena, Missouri, "Construction at the resort property is at a standstill and Shirato is still waiting for a first mortgage to be returned to Columbia Bank in Kansas. The FDIC put the bank in receivership in August... “I’ve heard it so many times from the FDIC. We have a process to go through. We were originally told 30 to 60 days... It took us six weeks before we could get anyone from the FDIC to talk to us.”

In Augusta, Georgia, a news article detailed "how FDIC and Government actions are bankrupting people and contributing to unemployment:"

"FDIC has decided to foreclose on the White's Building... In less than 90 days the bank failure and FDIC incompetence have turned this project into a non-performing mess and nearly bankrupted our company and me personally... During this time the developers have been keeping the lights on by using funds from their personal savings and home equity loans in the hope of saving the project. They had made Augusta their home, a town that embraced them as one of their own and provided them such warmth that they were happy to give up all they had to this project... Loudermilk accuses FDIC representatives of everything from indifference to incompetence... FDIC will most likely put the loan in a pool of non-performing loans and sell it for far less on the dollar."

The most irresponsible case happened in New York City.  According to this article FDIC broke the law and terminated contracts with Wamu landlords:

"F.D.I.C.'s October agreement with JPMorgan Chase and Washington Mutual allows Chase to pick and choose which of the city's 148 Washington Mutual branches it will keep. Chase will then turn over the rejects to the F.D.I.C. But here's the kicker: According to sources, the F.D.I.C. [CAN THEN SIMPLY TERMINATE THE LEASES OF THOSE REJECTED BRANCHES, ALL CONTRACTUAL OBLIGATIONS VOIDED]...

-I am Lanlord for on of the WAMU Location I don't know who to talk to about this Lease or how to pay my Mortgage.  SOMEONE PLEASE HELP ME
-I believe we spoke with each other. WaMu moved out as of 2/10/,leaving me with an empty building and half a million loan with Chase-WaMu. FDIC legalized the cherry pick by Chase without obligations.Jamie Dimon is really a very smart banker and good bzman,but at the price of all WaMu contractors, landlords,shareholders,etc.
-I got the same situtation. They stopped rent payment. I can not pay the mortgage and will lose the property."

Remember the response our government gave regarding AIG bonus?

"The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken.  The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place"

If President Barack Obama and Secretary of Treasury Tim Geithner obeyed contract law and thus could not stop AIG from giving out bonuses, then why was it legal for FDIC regulators to void contracts against average American citizens?

Speaking of AIG, remember how Goldman Sachs was made whole?  In the Wamu sale to JP Morgan, "The FDIC (USA) has made the claims of the counter-parties of all the swap contracts, futures contracts senior to those of the bondholders in the capital structure... This is a HUGE deal. Why were the counter-parties given precedence over the debt holders of the firm?"

If she is truly concerned about homeowners and mortgage defaults, Sheila Bair should focus all of her resources on assisting troubled banks in the best interest of all parties involved, like it was mandated to do so by Congress.  Her agency can mitigate the severity of problems by working DIRECTLY with the people and businesses negatively affected by FDIC's actions.

Instead, Bair announced another big project: FDIC would support Geithner's PPIP by financing "as much as $500 billion in purchases of residential and commercial real estate loans."

Anyone who has been following the financial crisis knows back in early March 2009 Sheila Bair wrote a letter to banks explaining her decision to raise FDIC fees.  My question here: How did an agency go from having funding problem because of increasing bank failures to being so well-endowed that it has an extra $500 billion to spare one month later?  Where would the money come from and who gave Bair the authority to use that for PPIP?  Bair was going to raise about $27 billion by increasing fees uniformly on all banks, including those smaller but responsible ones, and she specifically said on Bloomberg she would not use tax dollar for this purpose.

March 4, 2009
"No Taxpayer Funds Bair rejected arguments that the agency should use government aid to rebuild the fund. The FDIC has authority to tap a $30 billion line of credit at the Treasury Department and legislation pending in Congress would boost the amount to $100 billion.“Banks, not taxpayers, are expected to fund the system,” Bair said.  Asking for taxpayer support “could paint all banks with the ‘bailout’ brush.” "

Yet merely two days later she changed her mind about using taxpayer support and told Congress if the legislation to increase FDIC borrowing limit were to pass she would consider lowering FDIC bank charges.

March 6. 2009
"The Federal Deposit Insurance Corp. may reduce an emergency fee on banks to bolster reserves if Congress expands the agency’s borrowing authority with the Treasury Department to $100 billion, Chairman Sheila Bair said"

Three days later FDIC suddenly changed its story again and said insolvency was never an issue.

March 9, 2009
"Bair said the FDIC had enough money in its industry-funded reserves and was fully backed by the U.S. government. "The money will always be there," she said. "We can't run out of money.""

So FDIC was never really insolvent technically?  A responsible regulator does not declare potential insolvency that could have caused a nationwide bank run because "FDIC has enough money but wants cushion."

Coincidentally at the same time, the House of Representatives passed a bill to increase FDIC's credit line up to $100 billion.  In the Senate, the Depositor Protection Act of 2009, introduced to further increase that borrowing power to $500 billion, somehow has been inserted into the Credit Card Accountability, Responsibility and Disclosure Act.  I am not sure how FDIC's borrowing power is related to credit card reform but apparently some of our leaders do.  The Senate plans to vote for this bill in late April.  Congress can claim ignorance on passing TARP; however if they pass this increase on FDIC's credit line without any stipulation, full aware of Bair's intention to use $500 billion for PPIP, then it is up to the people to vote out those who choose to endanger our deposits.  I sincerely hope our representatives have the wisdom to mandate this new funding only be used for deposit guarantee and processing bank failures.  Read the Depositor Protection Act of 2009 carefully.  I believe FDIC only needs to report to Congress how it plans to use the extra $400 billion as long as it has approval from its board of director, the Fed, and our Secretary of Treasury.  
Sheila Bair said this "public-private investment fund to buy distressed assets to help clean up banks' balance sheets is likely to generate a "healthy" profit" for taxpayers and investors."  She also said FDIC "project[s] no loss."  Nobel Prize- winning economist Joseph Stiglitz blatantly called Bair's statement "that there is no risk... absurd."  I also suggest she takes a good look at the Maiden Lane companies.  

The Fed created Maiden Lane LLC to "provide a $30 billion "non-recourse loan" to J.P. Morgan, secured only by the worst tranche of Bear Stearns' mortgage debt... JP Morgan will not lose."  Just Maiden Lane LLC alone has already lost $5 billion so far.  Our Treasury recently took over these BSC and AIG "assets" for $72.21 billion from the Fed.  Thanks to the non-recourse loan, not only did we taxpayers just pay the Fed for BSC garbage, we also gave JP Morgan $29 billion plus all the good BSC assets.

"[W]hen Bair was the head of the CFTC, and there was an intense debate over whether more regulation of derivatives was needed, here's what Bair had to say (from an October 1993 Bloomberg article): The Commodity Futures Trading Commission (CFTC) has given the US$ 4.8 trillion derivatives market a clean bill of health, saying that fundamental changes in the way the market is regulated are not needed.... "We have a strong affinity for derivatives at this agency," said acting CFTC chairman Sheila Bair. 'We like them.'"

One would figure after her lack of support for regulation of derivatives, one of the major causes of this devastating financial crisis, Sheila Bair would work hard at her new job and try to shield our savings from further depreciation.  If Sheila Bair ever ends her quest to expand FDIC jurisdiction and actually focuses all her attention on protecting deposits and processing bank failures, maybe people in Georgia, New York, and all over the United States who have suffered as a result of FDIC bank seizures can get their help faster, their projects less delayed, and their homes or jobs saved.  

Lord Acton once wrote, " Power tends to corrupt, and absolute power corrupts absolutely."  FDIC is the sole guardian for over $4 trillion in deposits; this agency should not make decisions or take actions without any principle or prudence.  I personally do not want a backstabber presiding over an agency as important as this, nor do I want a regulator who says one thing but does another.  FDIC's actions involving taxpayers have been random; in one case Bair rejected using tax dollar but in another case she demanded more.  Recently, "Sheila Bair told Congress a new system of supervision that prevents institutions from taking on excessive risk and becoming so large their failure would threaten the financial system is needed."  Yet she didn't practice this belief; Bair rejected Wachovia's plea to stay independent and sold Wamu, making JP Morgan even bigger.

Moreover, I find it preposterous that these regulators have been demanding more power from Congress when "[a] growing list of government watchdog reports suggest the banking agencies have failed to effectively use the powers they already have."  Bair supported Geithner's request for the authority to seize and process bank holding companies by saying "[w]ithout a system that provides for the orderly resolution of activities outside of the depository institution, the failure of a systemically important holding company or non-bank financial entity will create additional instability as claims outside the depository institution become completely illiquid."  Illiquid?  Instability?  That was the reason for saving holding companies such as Citigroup that was probably more insolvent than Wamu with $300 billion?  FDIC didn't seem to care about instability when it practically destroyed and caused chaos in the ENTIRE bond market after it wiped out Wamu bondholders.                              

When your job is to help supervise the banking industry and over 20 banks have already failed so far in 2009, why are you still applying the same tactics and why are you not fired yet?  We are talking about OCC, OTC, FDIC, and the Treasury, all of them.  According to the Treasury's latest lending survey, banks that received TARP were not lending more in February.  "Except for housing lending, banks extended less credit to business and consumers in February."  In my opinion, in most cases these regulators have failed to protect the average American taxpayers; "the Treasury's inspector general, which issues reports for thrifts and national banks, has released four reports to date, and has seven more in process... The FDIC inspector general has completed five reports and is working on 19 more... [and] in every report the inspectors general said examiners identified red flags about the risks institutions were taking as early as 2005 or 2006... [but] did not result in aggressive action until 2007 or 2008."  

In fact, "FDIC faulted in four bank failures in '08... The Federal Deposit Insurance Corp. fell short in correcting deficiencies at four U.S. banks before they were seized last year at a cost of almost $1 billion to the deposit insurance fund, the agency's inspector general said."  I am shocked at the absence of reprimand as well as the little media coverage on such costly mistakes.          

History repeats itself.  Instead of preventing bank runs, FDIC often fuels them with open disclosure that lacks discretion.  Recently the agency "torpedoe[d]" this beloved Colorado community bank's attempt to stay in business, similar to the way it did to Wamu.  FDIC made it known that it was monitoring New Frontier but did not reassure the public deposits are safe and "fully backed by the US government."  Such obfuscation unfortunately led to a bank run and expedited the demise of this financial institution.  Moreover, according to the bank president, though he followed FDIC's instruction and tried to raise more capital, that "deal was doomed because [at the same time] the FDIC offered a sweeter deal... the icing on the cake being that the FDIC would take the bank's troubled loans out of the deal... When the FDIC has you out on the bid process, why would anyone buy you.. he also expressed frustration with [TARP], $53 million of which New Frontier Bank would have qualified for based on its size... [but] was denied... he called the process politically corrupt... it will cost the FDIC... $500- $750 million... if they give us $53 million we could save it."

In Hank Paulson's mediated rescue of Bear Stearns by JP Morgan, BSC was not wiped out.  On the other hand, in FDIC's brokered deals for Wamu and Wachovia, Sheila Bair made the immoral decisions to destroy shareholders, bondholders, employees, and creditors, not to mention the billions of dollars thrown upon the shoulder of all taxpayers.  What kind of a rescue was it with 12,000 Wamu employees ended up getting laid off when our administration has been attempting to minimize job loss?  Why did FDIC sell Wamu to JPM for $1.9 billion but then help JPM sell almost $40 billion in bonds?  Courtesy of FDIC and TARP from our Treasury, JPM can now buy brand new jets and build "a premier corporate aircraft hangar" at the expense of Wamu and the American taxpayers.

Worse, FDIC's Temporary Liquidity Guarantee Program completely annihilates our administrations's and congressional effort on curbing executive pay.  Banks now want to pay back TARP to avoid all the restrictions such as those on bonuses because they can raise capital via selling FDIC backed bonds.  As for her agency's involvement with the legacy asset program, Bair's claim that there is no risk has been questioned by NY Times and refuted by Nobel Prize winners.  I am not surprised; after all, what do you expect from the same individual who had the chance to advocate more stringent regulation on derivatives but found it unnecessary, and who picked Citigroup to save Wachovia? 

It is ironic enough we are using our tax dollar to help protect our CASH savings.  It will be pure robbery for FDIC to request extra funding under the pretense of deposit guarantee but then use the capital for PPIP.  The Congressional Oversight Panel recently "calls for sweeping changes," criticizing the current government combat against this financial crisis because it has cost "beyond what Congress appropriated... exceeding $4 trillion and smacking of high level of corruption."

Under Sheila Bair, FDIC has, and will continue to, put our savings in jeopardy.  This is one of the biggest moral hazards ever committed: her using about $19 billion to protect over $4 trillion in deposits, back more than $300 billion of bank bonds, and finance up to $500 billion in non-recourse loan/guarantee for PPIP.  Instead of taking unnecessary risks, this agency should use its reserve, whether from collecting premiums or borrowing tax dollar from Congress, conservatively and prudently.   You might not have been affected at all by these government actions on Wamu, Wachovia, or any of the four banks faulted by FDIC, but you should know unless you voice your concern and demand explanation and justice, sooner or later the same unfair treatments will happen to your bank, and worse, your children's bank.



**Please read the part regarding ECB over.  My original interpretation is wrong.  What FDIC's Wamu seizure may have caused was a huge reduction in lending; banks everywhere started hoarding money.  I am deeply sorry for this mistake