Will IndyMac Return From the Brink?

March 6, 2009 on 12:04 pm | In Economy | 1 Comment

In a story on Yahoo today, it is being reported that the Gov’t is in talks to return IndyMac to private ownership.

Many are touting this as a blue-print of succes for potential Nationalization with future banks. Of course the stockholders that were wiped out when the Gov’t took over the bank may disagree and the folks who had uninsured funds would certainly not agree. Another key difference is the size of the bank. IndyMac was about $40 Billion in assets when it was seized. It is now about $23BB. Citibank is $1.2 Trillion dollars. Just a wee bit bigger. :O) Bank of America is a tad larger at $1.47 Trillion. Don’t you love decimals, they can make big numbers seem so innocent.

I honestly think they should break up Citibank and Bank of America. If the Gov’t is of the mindset that they are too big to fail, they shouldn’t be able to get that big. I detest too much Gov’t intervention, but they are already way beyond that. They should set a limit on the size and footprint a bank should have. If banks want to maintain a large ATM network, partner with other banks. That is what credit unions do.

Allow some regional or community banks to purchase branches, assets, and deposits of Citbank or Bank of America that are in their area. I bet service would actually improve. Probably rates, too.

Yahoo also carried another story on whether the FDIC can handle all of the bank failures that will most likely happen throughout this year and into next year. The headline of course was an attention grabber and meant to cause fear. But the underlying story was about the efforts the FDIC is taking to shore up the insurance fund. They are assesing a 20 Basis Point or 0.20% premimum on banks insured deposits. So for every $1000 a bank has on deposit, $2 is being paid to the FDIC. That’s pretty significant. However, at least they are trying to be proactive. They also have facilities to borrow up to $500BB. Just turn the printing presses on. I don’t think you have to worry about not being paid back if a bank fails. I do worry about the future tax burden that will be put on our children, grandchildren, and great grandchildren.

There isn’t much other good news in the financial world or any other part for that matter. How about a quote?

You can shower a child with presents or money, but what do they really mean, compared to the more valuable gift of all — your time? Vacations and special events are nice but so often, the best moments are the spontaneous ones. Being there. Every moment you spend with your child could be the one that really matters. — Tim Russert (Host of NBC’s Meet the Press and author of Wisdom of our Fathers.

What are your thoughts?
cd :O)