CHESSNOID

The list of troubled banks on the FDIC watch list has grown.  My guess is that list will continue to grow for the next couple of quarters.

FDIC says list of troubled banks in 2nd quarter grows to 117 with $78 billion in assets - up from 90 banks, $26 billion in assets in 1st quarter.

Now, the FDIC is predicting they may need to borrow money from the US Treasury.  That makes you think exactly how many banks are going under?  I know the US Treasury will just print up as money as it needs to cover all the checks from bouncing, but that will definitely hurt the economy more and fan the flames of inflation.

Aug 27 (Reuters) - Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.

The borrowed money would be repaid once the assets of that failed bank are sold.

“I would not rule out the possibility that at some point we may need to tap into [short-term] lines of credit with the Treasury for working capital, not to cover our losses,” Chairman Sheila Bair said in an interview with the paper.

Bair said such a scenario was unlikely in the “near term.” With a rise in the number of troubled banks, the FDIC’s Deposit Insurance Fund used to repay insured deposits at failed banks has been drained.

In a bid to replenish the $45.2 billion fund, Bair had said on Tuesday that the FDIC will consider a plan in October to raise the premium rates banks pay into the fund, a move that will further squeeze the industry.

Now with the latest bad news about the housing market, economists and analysts are predicting this is the bottom again. I bet these same people are sitting on the sidelines waiting to buy or are trying to unload their housing assets before it drops again.

The new reports signaled to some analysts that the sharpest corrections in home prices and sales might be over. “The biggest declines, they’re all behind us now,” said Nigel Gault, chief domestic economist at Global Insight, a research firm.

“But,” he added, “that doesn’t mean we’re in any sense ready to move up. Or that we’re ready for sales to accelerate. Or for prices to flatten out.”