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Tuesday, September 29, 2009

FDIC Goes Wimpy

I'd gladly pay you Tuesday for a hamburger today
I don't mean that Blair and company have become shrinking violets, I am instead referring to the comic book character from Popeye.

The FDIC is asking banks to prepay their insurance fees through 2012, in order to handle the depletion of their insurance funds.

It is the Wimpy theory of funding, and its success is contingent on the idea that the recession is over, and so we will see a fairly robust recovery.

If they are wrong, and given the impending implosion in CRE which threatens small and regional banks, I think that they are, it won't do much.

In fact, I can see creditors going after the prepaid insurance premiums, which will create a big mess.

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