Not even close. Read pg. 26 of the following for what caused the S&L debacle. http://www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf Same document, pg. 33. Total cost to taxpayers was $124b out of a total cost of $153b against $500b in failed assets, much of which was recouped, albeit ineffectively, via the RTC.
i don't understand why you bash S.A. on the intelligent point he made ? the average consumer does not have any savings. bgp
. September 30, 2008 SouthAmerica: Reply to Jprad Sorry I made a mistake on my posting. The people who passed the increase in deposit insurance in the middle of night was the Carter administration in March of 1980 when they increased the deposit insurance from $ 40,000 to $ 100,000 limit. This increase in deposit limit was at the root of the problem that later on created the foundations that resulted in the late 1980âs Savings and Loan Scandal. This thread is about the impact that an increase in deposit insurance has in the US economy - the unintended consequences as well. The point is: if the deposit insurance had not been increased in March 1980 we may have avoided the savings and loans debacle of the late 1980's. **** March, 1980--Depository Institutions Deregulation and Monetary Control Act (DIDMCA) enacted. The law is a Carter Administration initiative aimed at eliminating many of the distinctions among different types of depository institutions and ultimately removing interest rate ceiling on deposit accounts. Authority for federal S&Ls to make ADC (acquisition, development, construction) loans is expanded. Deposit insurance limit raised to $100,000 from $40,000. This last provision is added without debate. Source: http://www.fdic.gov/bank/historical/s&l/index.html .
cmon you didnt think that was funny??....should I write it in a bashing format so you could understand???
Not true. The popular "savings rate" you hear about in the news doesn't count contributions to savings or retirement accounts, nor does it count proceeds from stock or real estate (cap gains). They take the aggregate measures of personal income, subtract spending and voila! you have the "savings rate". http://seekingalpha.com/article/36867-us-savings-rate-based-on-outdated-methods-of-calculation
If you read the document I had posted you could have learned something and posted a mea culpa. But, no. Like anyone long on agenda you're short on integrity.
. Jprad: If you read the document I had posted you could have learned something and posted a mea culpa. But, no. Like anyone long on agenda you're short on integrity. ********* September 30, 2008 SouthAmerica: The mistake that I made was that I thought the vote that they had in the middle of the night without any debate to increase deposit insurance had happened during the Reagan administration when in fact that 2 AM vote happened during the Carter administration. I did check the link that you mentioned and the title of that document is: âThe Cost of the Savings and Loan Crisis: Truth and Consequencesâ I donât care about what they did to solve that massive crisis. What I am point to you is what you should do to avoid creating the foundations that eventually result i putting the entire system in that position that you have a major financial crisis on your hands. I am showing you how to avoid planting the seeds that blossom into a major financial crisis. I am showing to you how to kill the seeds that would develop into a major future financial crisis. That is proactive thinking instead of your mindset of just overreacting when the entire house is on fire. You are questioning my integrity, and I have to question your intellectual grasp of the subject at hand. Talking about lack of integrity: you are probably in favor of the current Wall Street bailout and you are trying to mix the subjects and you want to justify how well the system of disposal of assets of the savings and loan crisis worked. I donât care how the disposal of assets worked after it was necessary major US government intervention â I am trying to correct the problem at the root before the problem grows and result in another major financial crisis. .
. October 1, 2008 SouthAmerica: I just saw George W. Bush announce on TV the temporary increase in deposit insurance from the current $ 100,000 limit to a new $ 250,000 limit. Now the Wall Street bailout plan has improved 1,000 percent and here is how they should sell it to the American people. How this is going to help you? You know that zero balance that you have on your bank account (the reason why you canât pay your bills including your mortgage) or better yet to really connect with a large number of people around the country â you know that $ 50 dollars or $ 100 dollars that you still have on your bank account â the government has good news for you that zero balance or $ 50 dollars or if you doing good and you have $ 1,000 dollars on your bank account the insurance against that money is going to increase from $ 100,000 to $ 250,000. I hope that with this increase in government insurance from $100,000 to $ 250,000 to protect you $ 50 dollars account balance it will make you feel good. If you did not believe that your $ 50 dollars was safe under $ 100,000 US government insurance now you should put to rest any doubts that you have about the safety of the $ 50 dollars that you have on your bank account. I understand that a very large percentage of the American people live from paycheck to paycheck and everybody should feel better now that the money that "they donât have" on their checking accounts are much safe now. Since Americans are âBrain Deadâ and Wall Street has shown to the people who is boss with the 777 point decline in a matter of minutes and Americans a scared to death - now that gives the US Congress a reason to pass the Wall Street bailout ASAP. Besides the Hedge Fund industry is waiting impatiently for their $ 700 billion bailout to pass to start the clean up job in the derivatives market mess. By the way, the real estate market can wait for the next bailout to clean up their mess. Any questions? How many bank accounts there are around the country? How many accounts have a balance above the $ 100,000 insured value? If there are just a minimum number of accounts with balances above the $ 100,000 deposit insurance limit then why they have to increase the insurance limit on all accounts? What is going on here? What is really behind this increase in insured value on bank accounts when most people have just a few thousand dollars on their bank account and away under the current $ 100,000 insured deposit limit? Answer from the US politicians: Because it sounds good and gives the impression to the American people that we are trying to do something useful. Donât you feel better that the $ 300 dollar that you have on your bank account right now will be insured up to $ 250,000 limit instead of the current $ 100,000 limit. The conclusion is: your $ 300 dollars is going to be much safer after they pass the $ 700 billion dollars Wall Street bailout. Why donât the US government increase the insured deposit amount only on special types of accounts such as a business account, or a payroll and charge them a certain amount of money related to the amount of government insurance that they want to protect that account up to $ 250,000 deposit insurance limit? Answer from the TV talking heads and US politicians: because you are not going to be able to get a student loan, a loan to buy a car, or TV, or a gift for your kids at Christmas time, you might not have credit even to buy food and prescription medicines, you are going to lose your job, you will be on the street without a roof over your head, and your retirement money is going to disappear, you will not be able to go to the movies anymore or go to the mall for shopping. I just spoke with Michael he lost his job recently and he was against the bailout early this week but now he is more confused than ever but he changed his mind and he is in favor of doing anything to fix something and somehow things are going to workout for somebody. Do you understand now why we need to act immediately to prevent the world to end right now? I hope all your doubts about this Wall Street bailout plan has gone away and now you understand what is going on in Washington D.C. and around the world. .
Increasing the FDIC insurance.... Currently, hearsay is "60% of all bank deposits are NOT covered by insurance"... that is, 60% of total on deposit is the amount >$100K in various accounts. The good part about that from the Gummint's point of view is, "much of the money is not FDIC responsibility". Now that folks are in a dither, they're shifting portions of their money to different banks in order to get all of theirs insured. If that's how people are going to behave (as well they should), the FDIC might as well increase the limit to $250K, or even more. Besides, the $100K limit was set in 1980s.. and in spite of Gummint's fudging of the data, we've had waaayyyy more inflation that the $250K limit represents.
I didn't provide the link for the benefit of how it was solved. As I said, on pg. 9 the document lists the CAUSES of the crisis and increasing the FDIC limit was not one of them.