In the prior report on the FDIC, I showed that the FDIC was out of money. The normal mechanism for collecting and paying out of FDIC funds involves collecting premiums from banks and using those to pay out for claims.
In the “Helping Families Save Their Homes Act of 2009” (S. 896) Congress authorized the expansion of an existing $30 billion “line of credit” from the Treasury to $100 billion with a final cap of $500 billion, as long as a two-thirds majority of the Federal Reserve and the FDIC boards think it necessary.
SEC. 204. ENHANCEMENT OF LIQUIDITY AND STABILITY OF INSURED DEPOSITORY INSTITUTIONS TO ENSURE AVAILABILITY OF CREDIT AND REDUCTION OF FORECLOSURES.
(c) FDIC and NCUA Borrowing Authority-
(1) FDIC- Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C. 1824(a)) is amended–
(A) by striking ‘$30,000,000,000’ and inserting ‘$100,000,000,000’;‘(A) RECOMMENDATIONS FOR INCREASE- During the period beginning on the date of enactment of this paragraph and ending on December 31, 2010, if, upon the written recommendation of the Board of Directors (upon a vote of not less than two-thirds of the members of the Board of Directors) and the Board of Governors of the Federal Reserve System (upon a vote of not less than two-thirds of the members of such Board), the Secretary of the Treasury (in consultation with the President) determines that additional amounts above the $100,000,000,000 amount specified in paragraph (1) are necessary, such amount shall be increased to the amount so determined to be necessary, not to exceed $500,000,000,000.
by chameleon