RE: “FDIC financing $50 billion to JP Morgan.” The problem is the float. The flo

RE: “FDIC financing $50 billion to JP Morgan.”

The problem is the float. The float of the bank they’re taking over is gone – that’s the reason for their seizure. So for solving the problem for the government of keeping the bank alive, and preventing the need for the FDIC to payout on guarantees on the 250k limit (minimum but really all of it) while STILL having the bank fail, the FDIC instead, loaned JPM 50B so it would have the float (cash flow) to handle the seized biz, and to tolerate additional runs on that seized bank.

In other words, this was a good deal for everyone. Especially when it’s the fed that by inflation caused the bonds to be valueless and drove these banks under.

There are plenty of reasons to blame the industry for 2008. And yes, there is some blame here for failing to predict the increase in interest rates and the decline in value of bonds. But as far as I can see the system is working FAR better than in 83 or 08. And I’m kind of impressed really. (Tho it will continue to get worse over the next couple of years.)

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