Vinny’s Blog

- First let us take a look at Lehman’s failure.

There was a post on FDIC and in that post there was a reference from IMF chief. Here are notes from that post.

August 19, 2008
Credit crunch may take out large US bank warns former IMF chief

“The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come,” Prof Rogoff said at a conference in Singapore.
In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one - one of the big investment banks or big banks,” he said.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4563171
To read previous post on FDIC please click on the link below.
http://www.diwakars.com/wordpress/2008/08/fdic-iv/

I don’t think anyone will disagree with IMF chief  ever if he predicted something……………..AGAIN !

—Now that crisis is unfolding and it’s going to be some time before we will know full potential of this crisis.

Until then let us see what may become next crisis…………………..

I always suspected that FDIC did not have enough money to guarantee all deposits in US. Not enough money for sure, not in this financial crisis that we are witnessing. But that’s me I am no pundit and I am no expert. It was just pure math that dictated a logical conclusion. But as always if something is right there should always be someone with more credit who should agree with the findings.

This was greatly missing until now………
Mr. Roubini thinks that $50 billion to insure about 1 Trillion of deposits are too less.

But who is Mr. Roubini ? Nouriel Roubini, of NYU’s Stern School and RGE Monitor.
And why should we listen to him - Roubini is one of the few market watchers to correctly predict the severity of this ongoing credit crisis.

So now what is it that he is saying ?

“But Americans are justified to be worried, says Nouriel Roubini, of NYU’s Stern School and RGE Monitor, who notes there is already a “slow-motion run on retail banks” occurring nationwide.

That “run” could accelerate as people realize the FDIC fund has about $50 billion to “insure” about $1 trillion in assets at the nation’s financial institutions, says Roubini. “They’re going to run out of money” unless Congress acts soon to recapitalize the FDIC.

In addition, the recent spike in number of banks on the FDIC’s “troubled list” is only through June, meaning even that inflated number understates the problem.

The intent here isn’t to add to people’s anxieties, but Roubini is one of the few market watchers to correctly predict the severity of this ongoing credit crisis. If nothing else, he says people with accounts exceeding $100,000 in value should spread their money - and the risk - among different firms.”

As always Here is link to the article. There is video of this Mr. Roubini with the article so you could read or listen to him.

http://finance.yahoo.com/tech-ticker/article/56994/Top-Economist-Americans-Should-Worry-About-Bank-Deposits-if-Congress-Doesn%27t-Act?tickers=LEH,MER,BAC,AIG,WM,^DJI,^GSPC

Wilbur Ross sees about 1,000 bank closures: report
Monday September 15, 3:18 am ET
http://biz.yahoo.com/rb/080915/wilburross_banks.html

[views and opinions expressed on this site are mine and you need not agree with them. You should not make any decision financial or otherwise based upon material you read here on this website. For that you must contact a an expert in the relevant area of your need]