Word: bankes
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Wilson's shipping restrictions were terminated in 1921, and the U.S. remained national-emergency-free until 1933, when Franklin Roosevelt proclaimed a national emergency so that he could institute bank holidays. Roosevelt never formally ended the emergency, and in 1973 an astonished Senate committee discovered that, technically, it was still in effect - along with three other so-called emergencies that collectively had activated 470 provisions of federal law. For 40 years, the U.S. government had accidentally authorized the President to seize property, control production, institute martial law and restrict travel at any time. Congress rectified this oversight with...
Despite those numbers, the banking system is no longer at risk of collapse. Megabank JPMorgan Chase, for instance, announced on Oct. 14 it earned $3.6 billion in the third quarter. Most of the institutions in danger are small. But those failures are straining the FDIC, which underwrites the nation's saving and lending by insuring deposits. When a bank fails, the FDIC makes up the difference between what's left and what's owed depositors, up to $250,000 per person per bank. Two years ago, the FDIC had about $52 billion in its deposit-insurance fund. Today that fund...
...FDIC funds is raising questions about how well the agency has contained the costs of the credit crisis. Bank failures are not of the FDIC's making: the Federal Reserve failed to rein in mortgage-lending, while regulatory agencies like the Office of Thrift Supervision allowed banks to make loans without adequate capital. But the FDIC has the final say on when and how to close a bank, and some believe it has been waiting too long to act, adding to the cost of failures. Regulators labeled Chicago-based Corus Bank critically undercapitalized in March, but it took the FDIC...
Delays are happening in part because a recession is not a great time to buy a bank, and the FDIC is having trouble finding acquirers for troubled institutions. The FDIC could liquidate a failed bank or run it itself, as it did late last year with IndyMac. But those options tend to be even costlier. Meanwhile, "bad banks are more like fish than wine," says Bert Ely, a bank-industry consultant and an FDIC critic. "They get smellier with...
...Chicago, where he teaches. (A video of the interview is at time.com/levitt.) Aside from the complexity, there's a crucial data limitation. "We have one macroeconomy," Levitt explains. "We get to watch the world unfold once." That means we have no way of knowing for sure whether the bank bailouts, to name one topical example, helped the economy or hurt it. (See the top 10 financial-crisis buzzwords...