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BofA, Wells Fargo, JPM, Citigroup FDIC Fees May Top $10 Billion

BofA, Wells Fargo, JPM, Citigroup FDIC Fees May Top $10 Billion

bank failureCourtesy of Mish

The FDIC is struggling mightily to stay solvent. Given that there are bank failures every Friday, it’s no easy feat for the FDIC to stay ahead of the game.

Please consider Bank of America, Major Banks’ FDIC Premiums May Top $10 Billion.

The Federal Deposit Insurance Corp.’s plan to rebuild its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion.

Bank of America, the biggest U.S. lender by deposits, may owe $3.5 billion under an FDIC proposal that banks prepay three years of premiums, based on the lowest assessment rate multiplied by the bank’s $900 billion in June 30 U.S. deposits.

“This seems like a very hefty amount,” said Tim Yeager, a finance professor at the University of Arkansas and former economist at the Federal Reserve Bank of St. Louis. “The FDIC’s projections of future losses are pretty severe, and they are trying everything they can to avoid tapping the Treasury.”

U.S. bank premiums range from 12 cents per $100 in deposits for the safest lenders to 45 cents for banks the U.S. considers risky, said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America. The FDIC yesterday proposed asking banks to pay premiums for the fourth quarter and next three years on Dec. 30. The fees will raise $45 billion.

Based on the current assessment and each bank’s deposits, Wells Fargo & Co.’s fee may be $3.2 billion based on its $814 billion in deposits, JPMorgan Chase & Co. may pay $2.4 billion and Citigroup Inc. $1.2 billion. The estimates exclude the FDIC’s plan to boost the assessment rate by 3 cents per $100 in deposits in 2011 or the agency’s assumption that bank deposits will increase by 5 percent annually.

FDIC Is Bankrupt

Last month I wrote As of Friday August 14, 2009, FDIC is Bankrupt.

Although that is a realistically correct headline (Please see You Know The Banking System Is Unsound When…. for a justification), I did overlook things FDIC did to temporarily stay in the game.

Prepaid fees is yet another attempt to keep the game going. How much longer this can last is anyone’s guess. Those prepaid fees are going to hurt bank earnings 100%


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The meaningless crisis at the FDIC’s meaningless insurance fund

The meaningless crisis at the FDIC’s meaningless insurance fund

By Justin Fox, courtesy of TIME

This news generated some worried-sounding headlines. Think about it for a moment, though: If the resources available to insure $4.8 trillion in deposits (it’s actually more than that, but the FDIC doesn’t say how much more for reasons I will explain near the end of this post) really amounted to only $10.4 billion, we shouldn’t be worried. We should be completely freaking out—pulling our money out of banks and stuffing it in mattresses. I haven’t noticed this happening lately. So either (a) we are a nation in complete denial, or (b) the size of the FDIC insurance fund doesn’t matter much.

I’m going to go with (b). Yes, the continuing shrinkage of the deposit insurance fund from a peak of $52.8 billion at the end of March 2008 indicates that banks are troubled. (Who knew?) But the deposit insurance numbers that really matter are how much the FDIC can borrow from the Treasury to cover any shortfalls and how much it can charge still-solvent banks to pay back any borrowings and eventually rebuild its insurance fund.

First, the FDIC’s borrowing line with Treasury: In May, Congress voted to increase it to $100 billion from $30 billion, with borrowings of up to $500 billion possible if the Federal Reserve Board and the Treasury Secretary give their okay. So we’re talking about $510.4 billion currently available to insure depositors. What’s more, Congress has stated in the past that FDIC-insured deposits are "backed by the full faith and credit of the United States." If losses passed $510.4 billion, Congress would presumably be good for them. If it welshed, argentined russia’d vallejoed jeffersoncountied, that would amount to a default on the nation’s obligations.

Taxpayers aren’t supposed to end up footing the cost of bank failures, though. Banks are, through the assessments (insurance premiums, basically) levied by the FDIC. The cost of these assessments tends to get passed on to depositors (in


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Zero Hedge

The "Sexy" Facts about Debt Markets

Courtesy of ZeroHedge. View original post here.

Submitted by Capitalist Exploits.

By: Chris Tell at http://capitalistexploits.at/

Like a bad case of hemorrhoids, debt is a topic too often left out of polite conversation. It's a good thing then that you don't come here for polite conversation. It is a topic previously written about in these pages and one which has the power to keep me awake at nights when I really ought to be doing other things.

In our quest to clearly understand debt around this ball of dirt we call home, how it impacts us, if it impacts us and what it all means we've had our team put together a comprehensive report on the topic. The report itself ...



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Phil's Favorites

Here's The Best Explanation We've Seen Yet For Why Oil Crashed

Here's The Best Explanation We've Seen Yet For Why Oil Crashed

Courtesy of 

Oil crashed today, with crude oil prices dropping from around $95 to $91 in a matter of minutes.

There were various theories for why, but the most compelling one is that there seems to be a lot more production than estimated.

Morgan Stanley sent out a note this evening from analyst Adam Longson that contains this table of production numbers/estimates for key producers. The key thing is that production is on the rise almost everywhere. Check out Libya, where output for the month surged to its highest level of the year. Everyone was freaking out a...



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Chart School

Moving Averages: Month-End Update

Courtesy of Doug Short.

Valid until the market close on October 31, 2014

The S&P 500 closed September with a monthly loss of 1.55%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I've also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Option Review

VIX Call Spreads Trade

The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.

Large call spreads traded on the VIX today caught our attention as one big optio...



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Sabrient

Sector Detector: Stocks fight off predictable weakness, but expect more downside

Courtesy of Sabrient Systems and Gradient Analytics

Yes, the market showed significant weakness last week for the first time in quite a while. In fact, the Dow Jones Industrial Average moved triple digits each day. But it was all quite predictable, as I suggested in last week's article, and certainly nothing to worry about. Now the market appears to be poised for a modest technical rebound, and longer term, U.S. equities should be in good shape for a year-end rally. However, I still believe more downside is in order before any new highs are challenged. Moreover, market breadth is important for a sustained bull run, so the challenge for investors will be to put together broader bullish conviction, including the small caps.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, re...



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OpTrader

Swing trading portfolio - week of September 29th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Market Shadows

Ebola vs. Us

Ebola vs. Us

By Ilene 

Ebola is spreading too quickly for Ebola-vaccine makers to conduct typical studies of safety and efficacy on experimental vaccines. Instead, vaccines will be tested for basic safety, but then deployed with protocols devised now in order to test for efficacy essentially on the field. Testing has to be expedited because the situation in West Africa gets worse every day while there are no approved vaccines or other treatments.

The chart below is from a paper in the New England Journal of Medicine showing estimates of the virus's trajectory projecting out to November 1, 2014. If current trends continue...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The latest issue of Stock World Weekly is now available. Please sign in with your PSW user name and password. Or simply take a free trial to try out our weekly newsletter. 

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Promotions

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Digital Currencies

Making Sense of Bitcoin

Making Sense of Bitcoin

By James Black at International Man

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes "money."

The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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