by John Cole
This just gets better and better (via):
The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized – and that bank failures were so infrequent – that there was no need to collect the premiums for a decade, according to banking officials and analysts.
I’d like to get some car, health, and homeowners insurance like that. I mean, I never have had cancer, have never wrecked my car, and my house has never burned down. Why are they still collecting premiums from me.
In other words, banks gave away a lot of money in the form of bad loans to people who had nonexistent means to pay them back, then lost their asses in the derivatives market in which they gambled on all the bad loans they and others had made, all the while earning money on fees and pretending nothing could go awry. But that is ok, because they are covered by FDIC and the premiums they don’t pay.
I eagerly await learning how this is Obama’s fault.