Saturday, February 12, 2011


So the FDIC has seized a couple of more community banks -- that is, banks owned by people in the communities they serve -- and once again, we're treated to the spectacle of hearing that Somewhere Community Bank had assets of $X and liabilities of $X-Y (that is, they had more assets than liabilities). At which point, I go, say wha?!.

Because look. If I have more in assets than I owe, I'm not bankrupt. And if a bank has more in assets than it owes, that bank isn't bankrupt. So why is the FDIC seizing the bank, rather than having the bank sell off assets or use assets as backing for loans at the Fed window if they have liquidity problems? Curious penguins are... curious. Because it looks an awful lot like the FDIC is serving as the hatchetman for Bank of America, Wells Fargo, and Chase as they pursue their agenda of locking up the entire banking market for themselves...

That said, some of these banks were simply badly run and did not fit the criteria I mention above (that of banks that had more assets than liabilities), and thus should have been closed down. But still, enough fit the criteria I mention above (more assets than liabilities) that I have to say, "Say wha?!". Because it just doesn't make sense.

-- Badtux the Curious Penguin


  1. Is it still OK to use "Dramatic Chipmunk" (which apparently was actually a groundhog) as a meme? I thought its iterations were all kewl and everything when I ripped across them a few months ago, but then I discovered they date from 2007. And I can't seem all cutting-edge if I'm using a meme that's all pre-Twitter and stuff, eh? But you're more au courant to the morès of teh Internets tubez than I am, Tux, so if you say it's not old-hat, I'll start dropping them into blog comments elsewhere as sly-links.

    On the topic of your actual post, it's always scary when a new bit of evidence of corpo-gov fascism is seen right out in the open, eh? Our minds keep looking for reasons to deny it. If the standard of "having more liabilities than assets" was applied fairly, without all the fudging like "mark to market is meaningless," the almost all American banks would need to be seized. Including the "Federal" Reserve Bank. Can't have that, can we?

  2. Bukko, penguins by definition are always cool, and can always re-use a meme that they used three years ago if it's appropriate. But this is not recommended for Tasmanian devils and other lesser species, because they aren't penguins :).

    Having more assets than liabilities was what got me doing the "say wha?" here. Apparently the FDIC shut'em down because the assets -- mortgages, mostly -- were going bad rapidly and depleting the banks' cash reserves. But the Fed is happy to give cash for trash at the Fed window, so WTF?

    As for the Federal Reserve, contrary to what libertarians and gold bugs believe, it has a money printing press, so by definition cannot ever be insolvent -- all it has to do is print more money if it ever runs out. This is rank heresy under the religion of gold worship, but so it goes, this is the world we live in today, not the world of 1929 where the chairman of the Federal Reserve refused to crank up his money printing presses to replace the money destroyed in the stock market crash because he didn't have enough gold in Ft. Knox to back it... thereby resulting in the collapse of the money supply, thereby resulting in the entire economy devolving back to a barter economy in large areas of the country, and barter economies are ridiculously inefficient thus causing much hardship. The U.S. money supply didn't recover until FDR kicked the U.S. off the gold standard...

    - Badtux the Banking Penguin

  3. It is interesting to note that the times when major countries recovered from the GD was exactly when they went off the gold standard.

    I believe Spain never went back on the gold standard after WW 1, and pretty much escaped the GD.

    A bit off topic.

    Lo siento,

  4. Spain had other issues after WW1, such as a civil war and a slide into fascism... it's hard to tell whether Spain suffered from the Great Depression or not, because having cities burning and tanks rumbling around the countryside tends to distort any economics statistics collected -- if, indeed, any are collected, rather than simply made up of whole cloth.

    - Badtux the History Penguin


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