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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (82085)7/25/2008 7:15:03 PM
From: ajtj99  Read Replies (2) of 116555
 
Mish, glad to provide something you could utilize.

My current concern is how are they going to keep the financial system from freezing up if/when WaMu goes under, as with about $150-billion in deposits, WaMu could take the FDIC way into the red.

Who do they go to to re-flate the FDIC? The banks. How are they going to pry the money from them? How is Citicorp, Bank of America, Wachovia, Wells Fargo, and other cash-strapped banks going to be able to cough up 1.5% of their deposits to make the FDIC whole again (typically the FDIC holds 1.25% of deposits in their fund, but they go higher when there are a lot of failures to fund).

If the FDIC is broke, how are they going to clear checks through the system. Banks were putting 8-week holds on some IndyMac checks after they went down. What's going to happen if WaMu blows and there's not enough FDIC money on hand to cover the insured?

This will be interesting.
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