The credit crisis is alive and well regardless of what banking lobbyist and McCain co-chair Phil Gramm says. This "mental" problem that we're all whining about is sounding like it could possibly be the most expensive in US hisroty. To be fair to Phil Gramm and McCain, this has to be difficult. They were relying on Gramm's model to be a winner, the cutting edge of right wing economic theory. Of course he can't recognize that an entire life's work is falling apart for the world to see. It has to be embarrassing if not humiliating to see the work of a lifetime fall apart so rapidly. Unfortunately for everyone else, we're stuck with the consequences of Gramm's poor theory.
About 95% of the $19 billion in deposits in the bank are insured, but that leaves $1 billion that was not covered by FDIC guarantees. According to the agency, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million. The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates.
"This will certainly be a costly failure. Whether it's the costliest, we just don't know at this point," FDIC Chairman Sheila Bair said on a conference call late Friday night. The failure could also affect premiums paid by all banks for deposit insurance, she added.
