BusinessInsider.com | FDIC Paints Terrifying Picture Of Bank Health "Furthermore, any additional special assessment or immediate, large increase in assessment rates would impose a burden on an industry that is struggling to maintain positive earnings overall."In plain English, that's like saying "everyone wants to pretend that the banks are solvent, but if we make them actually pay us extra money, it will make it harder to cover up the fact that the banks are insolvent". Thus, we wave a magic wand, and even though the FDIC is asking the banks for 3 years worth of money today, the banks will be able to recognize the cost over 3 years. Since when do we treat insurance as a depreciating asset? It's not like when you buy an airplane and recognize the cost over 20 years! There is a simple, unarguable fact: if Citibank pays the FDIC $1B TODAY (I'm making this number up) in fees for the next 3 years, Citibank has $1B less in cash today. Not $333MM less in cash - $1B less in cash. The FDIC's release today is a must read - it contains some serious and scary truths about our national financial situation, despite what the press and the administration have been telling us over the past six months.
