FDIC in trouble?

Feb. 25: FDIC Chair(person) Sheila Bair laughs, says "your money, if you're below our insured deposit limits, you're absolutely safe, no matter what." (1:36 into the video.) How jolly.

March 4: Bloomberg: Bair Says Insurance Fund Could Be Insolvent This Year. So they'll have to raise the rates they charge the banks. AP:

The head of the Federal Deposit Insurance Corp. has warned that the fund insuring Americans' bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts.

FDIC Chairman Sheila Bair acknowledged, in a letter to bank CEOs, that the new increased fees and hefty emergency premium the agency voted to levy last week will bring a "significant expense" to banks, especially amid a recession and financial crisis when their earnings are under pressure.

"We also recognize that assessments reduce the funds that banks can lend in their communities to help revitalize the economy," Bair wrote.

But given the accelerating bank failures that have been depleting the deposit insurance fund, she said, it "could become insolvent this year."

"Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative," Bair wrote in the letter dated Monday to the chief executives of the nation's 8,305 federally insured banks and thrifts.…

March 5: Bloomberg: FDIC May Cut Emergency Fee on Banks, Group Says. Raise the fee one day, lower it the next; does anyone have any idea what they are doing? They're winging it.

Senator Dodd, known for his financial acuity, has introduced legislation to "increase the FDIC’s borrowing authority from $30 billion to $100 billion." Given this expansion in borrowing authority, the agency will be able to cut back on the one-time emergency fee to be charged the participating banks. (As far as most people are concerned, that's all of them.)

The House may vote today on legislation to expand the FDIC’s borrowing authority from $30 billion to $100 billion and make permanent a $250,000 deposit-insurance limit authorized under the financial bailout legislation Congress approved in October.

Dodd, a Connecticut Democrat and the chairman of the Senate Banking Committee, plans to introduce a companion measure that will also raise the borrowing authority to a permanent level of $100 billion and temporarily increase it to $500 billion through Dec. 31, 2010.

Oh yes, just a few more billions, there's nothing out of the ordinary here. Billions and billions, all coming from the newly bottomless US Treasury.

What's going on here? Bair appears to be angling for a higher post in the Obama administration. Is that why she's trying to start a run on the banks? As part of an administration plan for Planned Impoverishment? Or as Doug Ross asks, "Did Obama intentionally nuke the economy?"

Update, only a few minutes later: Bill Quick says

Once the obvious implications of this sink into the markets and the media, I expect all hell to be out for lunch. If an appendage of the banking industry like Chris Dodd is being instructed by his owners to increase their credit line by 1700% (!!!), it’s a dead (pardon the term) giveaway as to what shape the bankers think their businesses are in.

And once the general public understands this, bank runs wouldn’t surprise the hell out of me.