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I thought the FDIC was for protecting my bank deposits, not for lending money to hedge funds to buy toxic assets with

Apparently, Hank Timmy doesn't agree:

[T]he Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

The goal of the plan is to leverage the dwindling resources of the Treasury Department’s bailout program with money from private investors to buy up as many of those toxic assets as possible and free the banks to resume more normal lending.

(See the update here to that idea.)

But seriously, is that the purpose of the FDIC?

Honestly, it looks like these guys are just grabbing any pile of money they can find and throwing it at the banksters; thank gawd that "entitlements reform" summit got stopped, or else they'd be throwing Social Security into the enormous hole (unless they're doing that without telling us, of course. For our own good).

Then again, there's the FDIC's "systemic risk exception" -- a long post somebody smarter than I am should read and factor in.

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Submitted by jawbone on

(taxpayer funds) to the Big Banksters and Hedgies*? We are so fleeced.

Last night I'd read that the money for the latest attempt to get the Paulson Fix to fly would have the money going through the FDIC, and I asked where Sheila Bair stood on this. Now, more information is provided in this guest post and elsewhere that the first rush TARP legislation set up the FDIC to be a conduit if needed to avoid Congressional oversight eventually.

Boy, do I agree I'd love to see somone analyze this guest post for econ dummies such as I!

And Yves has brought up the the comment about the feds setting up a fraud and money laundering scheme into a post of its own.

If you click over to Naked Capitalism, you might want to check out the antidote du jour photo of the two little wrinkly piglets. Those little piggies will grow up to go to market, on Wall Street (if we still have a Wall Street).

*Hedgies--I refuse to call hedge fund managers "hedgehogs" as I have a warm spot in my heart for these bristly little creatures.

Submitted by [Please enter a... (not verified) on

That the FDIC is placing their money somewhere else is troubling to me. I think that they should only serve one purpose and that's to make sure that my assets are protected and that if the bank closes, I get checks from them indicating the amount I had placed in the bank.