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The FDIC Loves the Banks

October 15, 2009

How and why?

The FDIC has a cash crnch and wants backs to pay three years of fees upfront, okay fair enough.

What do the banks get out of this payment?

Accounting rules allow for the prepayments to be recorded as if they had used the cash to purchase an asset. Based on the risk of the FDIC payments which is zero the accounting rules do not require any capital to be held against them.

Pretty sweet, huh?

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