Next Debt Crisis May Start in Washington: Bair

She’s as much a part of the problem as any of them.

Also, she continues to support taxing banks for FDIC losses, which works counter to Fed rate setting policy.
Across the board taxes on banks hike rates charged to borrowers, while the Fed is trying to get them down.

Also, why should a good bank be charged for losses of failed banks, when bank assets, lending policies, and operations in general are fully regulated and supervised by the FDIC? She’s making good banks pay for FDIC failures.

Banks are designated agents of the Fed, public/private partnerships established for public purpose, govt. regulated and supervised, and as such should not be charged anything for FDIC insurance. It makes no sense for the govt. to charge one of its agencies for its support.

Next Debt Crisis May Start in Washington: Bair

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington Post.

The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government’s “unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit,” Bair wrote.

This entry was posted in Banking and tagged . Bookmark the permalink.

10 Responses to Next Debt Crisis May Start in Washington: Bair

  1. Jeff Lindsey says:

    What Exactly Is the U.S. National Debt?
    Have you ever been to a high scoring football game where the fans worried about running out of points as the score got higher and higher? Or, have you been bowling and wondered if the bowling alley would run out of pins as more frames are bowled and the scores continue to increase? Of course you have not. You may even chuckle a bit as you consider this concept. Well, that is what people are doing when they express concerns about the United States running out of money. The United States operates a fiat currency (not backed by gold or any other commodity or currency) in an environment of flexible exchange rates. To satisfy its obligations, it simply creates a sufficient supply to cover. This is simply a balance sheet operation between the United States Treasury, the Federal Reserve, the commercial banking system, and the ultimate debt holder. Accounts are simply marked up in the various computer systems to reflect the transactions; much like a scorekeeper at football or basketball game. Insolvency is not risk for the United States.

    Reply

  2. You might be interested in The Amazing Ignorance of the Chairman of the FDIC .

    I wonder, what are the qualifications for that job?

    Rodger Malcolm Mitchell

    Reply

    strawberry picker Reply:

    Every king’s court needs a jester, a fool, a clown. In the monetary systems case, it seems we need a whole plethora of fools and clowns. Who said don’t take life so seriously, you will never make it out alive? Don’t be so mean, a little friendly jesting can win you friends, but hate filled attacks will only alienate you.

    Reply

  3. Greg says:

    Strawberry Picker

    I think the point of Warrens post is that there is no operational connection between banks payments to the FDIC and the govts ability to guarantee deposits so why act like there is. We have all the necessary tools to insure deposits and regulate banks without charging banks. Its quite similar to the payroll taxes and SS. There is no NEED to remove money from workers paychecks to send checks to senior citizens.

    Reply

    strawberry picker Reply:

    We have all the necessary tools to insure deposits and regulate banks without charging banks.

    I disagree we have the tools, bank regulation, regulation in GENERAL, is a total failure in this country, from brooksely borne in the ivory towers down to the loan officers at countrywide to the barney frank (friends of mozilo) corruption issues in congress, there’s a whole lotta regulation needing to be done and our tools are wholly inadequate.

    Anatole Kaletsky
    GaveKal Chief Economist
    Primary Tel +852.2869.8363

    http://www.financialsense.com/financial-sense-newshour/in-depth/anatole-kaletsky/capitalism-4-0

    He is talking about how markets and government BOTH have now failed in this new evolution of capitalism, and from the ashes the capitalism 4.0 phoenix will arise.

    Its quite similar to the payroll taxes and SS. There is no NEED to remove money from workers paychecks to send checks to senior citizens.

    I don’t know about all that silly accounting and off balance sheet stuff and academic theory that fails when the agents are unehtical instead of honest, but here is what I do know regarding social security, medicare etc etc

    My granpappy worked his farm, and he had 11 kids, and when he got old, 11 kids were able to share in his care, but today most of his grandkids only have 1 or 2 kids if that, so when they get old, there simply won’t be enough human beings to share in the care, I tried to get warren to set me up with Sada so I could make lotsa babies and do my personal part to fix this demographic problem, but I guess you guys have found some solution in your MATRIX/NEO new math virtual databases that will work instead of my very basic animalistic/reproductive one.

    Reply

    beowulf Reply:

    “My granpappy worked his farm, and he had 11 kids, and when he got old, 11 kids were able to share in his care, but today most of his grandkids only have 1 or 2 kids if that, so when they get old, there simply won’t be enough human beings to share in the care…”

    Well, that is certainly one argument for accepting more high-skill immigrants. The United States is only 5% of the world’s population, we can cherry pick as many immigrants as we want. I guess the key word is “high-skill”. Compare the Canada / New Zealand “point-based” immigration system vs the US’s de facto open border policy, which allows Mexico and other developing countries to export their low-skilled workers to us.

    As for your last point, Warren is a pretty good sport when commenters tease him about his career, writings or cars, but its not cool to to make inconsiderate jokes about the guy’s family.

    Reply

    strawberry picker Reply:

    Well, that is certainly one argument for accepting more high-skill immigrants.

    Warren often says, we have to decide what we want to do with our old people, most career businesswomen I meet don’t want to talk about the issue with me. I tell them because they chose career instead of having many babies, we now have a demographic crisis of biblical proportions approaching and the old people are about to suffer terribly in this society. That like all ponzi schemes, the ponzi scheme of american growth requires lots of babies down at the bottom of the demographic pyramid. Dude it used to be the american way to do our own hard work, but now it seems as affluence and wealth have come, babymaking needs to be outsourced to poor people. Let them have the “hassle” and “aggravation” of childbirth and raising. In a lot of ways I think this is at the core of what is really wrong with the USA.

    The United States is only 5% of the world’s population, we can cherry pick as many immigrants as we want. I guess the key word is “high-skill”. Compare the Canada / New Zealand “point-based” immigration system vs the US’s de facto open border policy, which allows Mexico and other developing countries to export their low-skilled workers to us.

    Dude no kidding! I have tried to open foreign bank accounts and could not because I am a US citizen, and then tried to find ways to immigrate to another country, I have the education/health/and financial resources to still do so, but I feel very sorry for many of you US citizens who do not, you are slaves and trapped in the system, you are in a room with warren mosler, he wants to collect business cards from you and he has a gun, and you have no way to get any and have no other escape, I really pity you dudes.

    As for your last point, Warren is a pretty good sport when commenters tease him about his career, writings or cars, but its not cool to to make inconsiderate jokes about the guy’s family.

    Sadly, happy laughing guy that I am, I wish I WERE joking. Sada has not had enough babies, and none of her peers either, to sustain american growth, it is a very black and white issue, we didn’t breed enough, and now we want to pass that burden onto poor third world people. It goes against everything donald trump taught me about the opposite sex, but as a sacrfice to my country (and to my 7 digit portfolio) I guess I could suffer Sada as a wife for the sake of many kids to sustain the old people (warren will be old soon, lots of grandkids is what my grandparents said kept them alive)

  4. strawberry picker says:

    Also, why should a good bank be charged for losses of failed banks, when bank assets, lending policies, and operations in general are fully regulated and supervised by the FDIC? She’s making good banks pay for FDIC failures.

    Warren didn’t you used to be a kennedy democrat, all about social welfare? Isn’t it for the “greater good” for your good bank in palm beach, florida to pay for that bad bank I used to talk about in Miami. Remember the one where a latin loan officer was lending his illegal alien cousin money for a new truck, a nice big house near south beach, money for his defunct business that was never going to generate a return, etc etc – I talked about it all years ago on your board and how the government regulators were a bunch of clowns. You seem to sound a little upset that your good bank now has to bail out that bad bank, I remeber CORUS, you probably aren’t happy your good banks has to bail the likes of them out either, but I think you should be happy to bail the losers out with your winnings, that is democratic way no? A rising tide will lift all boats, don’t be so stingy with your profits, tis better to give than receive in this holiday season ;)

    Reply

  5. roger erickson says:

    ps: Are there specific words naming the phenomena of inflated & deflated thought processes? Is there a White House Czar specifically tasked with monitoring & popping the hot air Bubbles over each bureaucratic agency?

    Inflatuation?
    Deflatuation?

    Reply

  6. roger erickson says:

    Maybe we should also expect a new “adventure” tax from the IRS, to help “pay” for the DoD?

    Sounds like the current “Thinking Crisis” in DC is going on unabated, extending our real output gap.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>