When FDIC head Shelia Bair says her agency might have to bolster the FDIC's insurance fund with Treasury borrowings to pay for the new spate of bank failures, a lot of us assumed there's an actual FDIC fund in need of bolstering.
We were wrong.
As a former FDIC chairman, Bill Isaac, points out in the .pdf below, the FDIC Insurance Fund is an accounting fiction. It takes in premiums from banks, then turns those premiums over to the Treasury, which adds the money to the government's general coffers for "spending . . . on missiles, school lunches, water projects, and the like."
The insurance premiums aren't really premiums at all, therefore. They're a tax by another name.
All of you feeling comfortable that the FDIC "Insures" your bank account for up to $100,000 may want to ask, where will the government get the cash when no one will buy government debt anymore? Guess what. . . . . . they won't. Many of us may find ourselves destitute.
Read the proof from the former Chairman of the FDIC here
