Top Economist:
Americans Should Worry About Bank Deposits if Congress Doesn't
Act
By Aaron Task
16/09/08 "Yahoo
Finance" -- With the "financial storm of
the century" hitting financial institutions, many Americans are
worried about the safety of their bank deposits. While the FDIC
insures individual accounts up to $100,000, the reaction to
IndyMac's failure this summer -- lines outside retail branches
-- shows Americans have limited faith in the Federal Deposit
Insurance Corp., which guarantees individual accounts up to
$100,000.
Update: "The banking system is safe and sound," Treasury
Secretary Hank Paulson declared at a mid-afternoon press
conference Monday, seeking to ameliorate such concerns.
"Nothing is more important than the stability and orderliness of
our financial markets [and] regulators remain vigilant," Paulson
continued. "We're working through a difficult period in our
financial markets right now as we work of some of the past
excesses, but the American people can remain confident in the
soundness and resilience of our financial system."
But Americans are justified to be worried, says Nouriel Roubini,
of NYU's Stern School and RGE Monitor, who notes there is
already a "slow-motion run on retail banks" occurring
nationwide.
That "run" could accelerate as people realize the FDIC fund has
about $50 billion to "insure" about $1 trillion in assets at the
nation's financial institutions, says Roubini. "They're going to
run out of money" unless Congress acts soon to recapitalize the
FDIC.
In addition, the recent spike in number of banks on the FDIC's
"troubled list" is only through June, meaning even that inflated
number understates the problem.
The intent here isn't to add to people's anxieties, but Roubini
is one of the few market watchers to correctly predict the
severity of this ongoing credit crisis. If nothing else, he says
people with accounts exceeding $100,000 in value should spread
their money - and the risk - among different firms.Click on
"comments" below to read or post comments
Comment
Guidelines
Be succinct, constructive and
relevant to the story.
We encourage engaging, diverse and meaningful commentary.
Do not include personal information such as names, addresses,
phone numbers and emails. Comments falling outside our
guidelines – those including personal attacks and profanity –
are not permitted.
See our complete
Comment
Policy and use this link
to notify us if you have concerns about a
comment. We’ll promptly
review and remove any inappropriate postings.
Send Page To a Friend
In
accordance with Title 17 U.S.C. Section 107, this
material is distributed without profit to those
who have expressed a prior interest in receiving
the included information for research and
educational purposes. Information Clearing House
has no affiliation whatsoever with the originator
of this article nor is Information ClearingHouse
endorsed or sponsored by the originator.)
|
