American Banking System Collapsing; FDIC Insolvent

I’m a bit surprised that people still have more than just operating capital in US banks. Why? Because bank failures are accelerating, and the FDIC is broke.

On Friday, seven more banks failed, bringing the 2009 total to 140.  Morever, the FDIC was unable to find banks willing to take over the operations of 3 of the banks.  While the FDIC created new institutions to assume two of the failed banks’ operations, customers of a third will receive checks for their deposits of up to $250,000.  This is the first time that no bank was willing to accept a failed bank’s assets.

Georgia, which continues to lead the country in bank failures, saw RockBridge Commercial Bank, in Atlanta GA, shutdown.  However, what makes this closure interesting is the FDIC’s inability to find an acquiring financial institution for the failed banks deposits and assets.

The FDIC will instead will be mailing checks to depositors for the amount of principal and interest on all insured accounts, as of December 18, 2009.  Accounts are insured up to $250,000, but the FDIC said some different types of accounts may be insured for more than that amount.  IRA funds are treated separately from customers’ other accounts and are insured up to $250,000 as well.

The FDIC is advising any customers holding accounts in excess of $250,000 to contact their offices at 1-800-405-1604 and speak with a claims agent as they are reviewing those circumstances on a case by case basis.

Meanwhile, the FDIC, already taking extraordinary steps to bolster its empty coffers, may not be able to absorb any additional failures. How?  The FDIC is insolvent.  When a bank fails, like the RockBridge Commericial Bank of Atlanta, the FDIC must borrow money from a credit line in order to pay off customers’ insurance deposits.  With China signaling it is unwilling to buy more US debt, how much more lost wealth can the FDIC absorb?  S

Bad Bank List Grows

The government won’t tell you, but the number of banks likely to fail in the near future is growing, as shown in this graph from CNN. In the last week of November, the FDIC also revealed that it’s insurance fund is now in the red.

So here’s America’s financial situation:

* $12 Trillion in debt

* $106 Trillion in unfunded obligations

* Foreign governments have cut off credit

* Congress raising debt ceiling

* Congress taking over healthcare industry

* Banks failing at accelerating rate

* Bank deposit insurance company has failed

So why do more people support the Tea Party than support either the Democrats or Republicans?  Because the Tea Party is the solution to the collapse of socialized America.  Don’t be surprised when millions of Americans block traffic to protest government malfeasance in 2010, the year of civil disobedience.