That fact that John McCain's son served on the board of the Silver State Bank until recently should not matter much to customers. The bank is gone.
According to The Wall Street Journal, "The lender, the 11th bank to fail in the U.S. this year, was overexposed to risky real-estate loans, a problem that's vexing many banks amid the worst financial crisis in a generation." Silver State had $1.7 billion in deposits the shut-down will cost the FDIC several hundred million dollars.
The FDIC has already indicated that it may need to go to the U.S. Treasury for more capital. Some experts think that dozens of banks will fail. At the pessimistic end of the spectrum economists believe that number could go into the hundreds, if housing prices stay in a free-fall.
The problems at FDIC-insured banks raises the question of how much capital Treasury has to spread around. In theory that amount is nearly unlimited. That is, off course, because U.S. tax-payers send the U.S. government so much money every year.
Those are the same tax-payers who are losing jobs and can't make their own mortgage payments.
Douglas A. McIntyre is an editor at 247wallst.com.
Before the bell: Stocks ready to climb on hopes of continued low rates
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Holiday hiring slow for retailers
Reader Comments (Page 1 of 1)
9-06-2008 @ 8:20PM
Robert NYC said...
Another few hundred million here, Fannie and Freddie a few more billions there - which will cascade as all the banks holding their preferred stock will take haircuts against their capital base.
This is only getting bigger. Treasury will print dollars like crazy to bail these firms out and inflation goes Up, Up, Way Up!
By the way, Washington Mutual is charging a full $3 fee fot their ATM's in NYC. The corner stores and bodega's used to be at the high end of the scale at $2. How badly does WM need money to jack to the highest charge? How many preferred shares of FNM and FRE does WM own? Watch that capital base as WM going belly up bankrupts the FDIC and the goverment is on the hook for more billions.
Lots more paper - same amount of gold. Hmmmmm.....
9-06-2008 @ 8:34PM
Lori Mabel Campbell said...
John McCain's son and the ilk on the board should return their fat pay checks and add enough to it to pay this debt instead of relying on the government. If I do not run my business correctly, I pay. Our country favors the rich and powerful. Why is this a debt for us instead of them? What does daddy John McCain say about this? Isn't he espousing, self reliance the government is not there to bail you out he says of the poorer folk..
9-06-2008 @ 9:31PM
Ben said...
If all things fail buy gold?
9-06-2008 @ 9:37PM
Anthony Donnelly said...
Yet another great reason why more businesses should start using Merchants Barter Exchange to bolster the economy.
At some point you just can't keep printing money and expecting the well not to dry up.
9-06-2008 @ 9:52PM
FreshMeatz said...
Seems Ron Paul and his money issues that said would hurt the banks is starting to feel the cool sting of that needle in the arm.Why people would listen to the four people running for office is amazing compared to this man. But love is blind and I guess the public loves to get screwed.
9-06-2008 @ 10:21PM
b said...
bet little mccain made out ok though. just like his daddy did with the keating five.
9-06-2008 @ 11:45PM
jbowyer said...
The author is correct--"The problems at FDIC-insured banks raises the question of how much capital Treasury has to spread around. In theory that amount is nearly unlimited..."
The author is silly--"because U.S. tax-payers send the U.S. government so much money every year."
Dear author, please read Robert NYC's and Anthony Donnelly's comments to your story. **They** understand economics.
Fire up the printing presses! Inflation will follow by itself.