Friday, July 11, 2008

4-8 Billion down 48 to 52 billion to go

That's how much money may be left in the FDIC's account after it finishes paying for Indymac's mistakes.  At an estimated $32 billion in assets this is the second largest bank failure in U.S. history, but not the last you'll see of things like this for some time.  Matt at ActiveRain claims there are another 2 billion in uninsured deposits.

Yves at naked capitalism points out that while this is the second biggest, the biggest Continental Illinois for $40 billion in 1984, was during a time when the rest of the banking system was in better shape than it is now.

Continental Illinois' wikipedia entry claims Continental failed, in part because of the bad loans it took on when it purchased Penn Square Bank of of Oklahoma. It wasn't until 1994 that the federal government was able to find a buyer for Continental Illinois.

Bank of America recently swallowed up Countrywide financial.  I'm honestly not sure why.  It might have something to do with the $300,000,000,000 bailout to banks promised by H.R. 3221.  Otherwise the Countrywide deal looks like it could land bank of America in the same boat as Continental Illinois.

 The bank that finally purchased Continental Illinois from the government...Bank of America.

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