Another Friday, another bank failure, the eighth largest this year. This one will cost almost a billion dollars to clean up. Still more of the fallout from the unregulated free market capitalism of the Bush Crime Family. The free market isn’t free.
Paul Volcker, who heads Obama’s economic advisors has criticized the Obama Adm. for re-inflating the banking bubble, but the pumps continue running full speed just the same. Bankers are starting to whine about the prospect of paying into the FDIC the cost guarantying the deposits in the banks that fail. To avoid having the banks pay for it, they are about to launch a scheme to shift the cost directly to taxpayers. The Treasury will bail out small banks that can raise matching investment money. They plan to recycle the 700 billion the large banks are pretending to repay. This will keep many of the 2000 plus banks expected to fail from going under. At least for now.
Even with the bailout that will start in October, the FDIC expects 150 banks to close this year, the worst year since 1992 when the Republican S&L scandal was in full bloom. The head of the FDIC is predicting that bank failures will cost $70 billion over the next four years. I don’t think they are counting the $700 billion in bailout money. (prairie2 said sarcastically)
The real economy is not doing so hot either. Sales of durable goods were down in August, existing home sales were down sharply with new home sales and housing starts slumping badly even with an $8000 government subsidy. The unemployment rolls continue to increase several hundred thousand each week. The government expects 800,000 people to become homeless this year, mostly from home foreclosures.
They are probably underestimating this number and these formally middle class are added to 3.5 million working poor that are homeless at least part of every year in the US. At least with global warming; it’s not so cold to live outdoors. The Republicans have been thinking of us.