It’s back to business on Wall Street. Banks, now sporting excess reserves, are repaying the government assistance they received only months ago and are awarding themselves massive bonuses once again. Everything is hunky dory. Or so it seems.
If the Banking System Is Healthy Again Why is the FDIC Preparing for More Failures? The WSJ reports:
The Federal Deposit Insurance Corp. in the next year plans to add more than 1,600 staffers, mostly to handle bank failures, and is pushing its budget up 35% as the number of tottering banks climbs…
More than 130 banks have failed this year, and the agency’s inventory of assets in liquidation has more than doubled from the beginning of the year to $36.8 billion through the end of November. The FDIC has also agreed to share future losses on the assets of more than 80 failed banks, representing $108 billion in additional exposure.
In the agency’s 2010 operating budget, released Tuesday, the FDIC would spend $2.5 billion to fund its bank failure operations out of a total budget of $4 billion. The agency’s entire operating budget for 2009 was roughly $2.6 billion.
“It will ensure that we are prepared to handle an even larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions,” FDIC Chairman Sheila Bair said in a statement.
Can it be that under the surface not much has changed over the past few months?