FDIC chair: Deposits in nation’s banks safe

FDIC chair: Deposits in nation’s banks safe

Posted: Tuesday, July 15, 2008 9:25 pm
By: AP

WASHINGTON (AP) — The nation’s banking system is “absolutely safe” and Americans’ insured deposits in banks protected, the head of the Federal Deposit Insurance Corporation said today. “Insured deposits are absolutely safe,” Sheila Bair, FDIC chairman, said in an interview on CBS’ “The Early Show.” “The banking system as a whole is absolutely safe.” The FDIC insures bank deposits of up to $100,000 and up to $250,000 for funds in retirement accounts such as an IRA. Bair said that while there will likely be more bank closings — like that of IndyMac Bank, which last week became the largest regulated thrift to fail — they won’t occur on a large scale and should be put in “appropriate context.” “There are 8,500 banks,” Bair said. “This is one. “We’ve had five bank closings this year. I won’t say that banks don’t have challenges right now. They do.” But, she noted, “No insured depositor has ever lost a penny of insured deposits throughout the FDIC’s 75-year history.” In other financial news, Fed-eral Reserve Chairman Ben Bernanke is scheduled to brief Congress today on the economy, which has been walloped by high energy prices and fallout from the housing slump and credit crunch. His testimony before the Senate Banking Committee comes just two days after the Fed and the Treasury Department came to the rescue of mortgage giants Fannie Mae and Freddie Mac, offering to throw them a financial lifeline. The companies hold or guarantee more than $5 trillion in mortgages — almost half of the nation’s total. The Bush administration is asking Congress to increase lines of credit to Fannie and Freddie and to let the government buy their stock. The Fed has offered to let the companies draw emergency loans. The testimony also comes amid a backdrop of rising oil prices and a slumping dollar, and as stock markets overseas tumble amid worries about the U.S. financial system. On Monday, shares of U.S. banks and financial companies swooned on concern that the plan to shore up Fannie Mae and Freddie Mac would not be enough to keep them from failing, which could undermine the U.S. and global financial system. Published in The Messenger 7.15.08

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