The Federal Deposit Insurance Corporation (FDIC) announced today that effective immediately they will cease all banking operations nationwide.
“The simple truth of the matter is that we just couldn’t deal with this many banks failing all at once,” said FDIC Chairman Sheila Bair. The government agency provided so-called deposit “insurance” for bank deposits up to $100,000.
Created in 1933 during the Great Depression, the FDIC was intended to be a government-issued security blanket that would restore confidence in the banking system among the American people. Unfortunately, the agency was never granted enough power or funding to handle more than one or two minor bank failures per year.
“We never really expected this degree of crisis,” explained Bair. “I mean, who could have possibly predicted that decades of increasing dependence on credit capped off with an enormous housing bubble would have led to this much financial trouble?”
The failure of IndyMac Bank just over a week ago drained over 99% of the FDIC’s reserves, leaving them with a mere $84.73, which was depleted the first time an agency-owned Expedition had to be gassed up.
Up through 2007, assessments paid to the FDIC by member banks meant that the agency was self-sufficient. However, as larger banks began to fail in 2008, it became clear that they would soon require massive additional federal funding if they were to continue to fulfill their mission.
“We almost went under during the S&L crisis in the late ’80s,” said Bair. “We were able to pull through that one by pocketing a cool $150 billion from US taxpayers.”
FDIC executives petitioned Congress for an infusion of financial support, but were turned down.
“We have more important things to spend the American people’s money on,” explained Speaker of the House Nancy Pelosi. “It’s not like we can just stop funding the TSA’s passenger-harassment initiatives or eliminate NEA subsidies for offensive art installations.”
Following their failure to procure a bailout from Congress, the FDIC Board of Directors considered alternative methods of raising capital, such as holding a bake sale or following up a promising lead with a deposed Nigerian prince.
In the end, none of the schemes were deemed viable, and the Board of Directors voted to dissolve the agency, selling what little assets were available to fund six-figure severance plans for agency executives.
“The bottom line is that there is only so much money to go around, and unfortunately for us Congress has decided that this round of irresponsible, taxpayer-funded bailouts goes to Fannie and Freddie,” said Bair. “What can you do?”