According to this post over at Mish Global Economic Analysis, the FDIC went bankrupt on Friday with the latest 3 bank failures.   Technically, the FDIC can tap the Treasury so they money flow will continue but that’s tax payer money not the premiums banks pay into the pool to insure deposits.

We’ve  almost come full circle as I warned people back in September 2006 that we may be facing an SPIC/FDIC Armageddon in the near future and the future is getting closer day by day.   Of course, FDIC chair will have some cover because back in March she issued this warning:

March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group

So she’s got herself covered with the warning issued and I can already see the news clip, “I warned the public back in March that this could happen…..people should have taken action….blah…blah…blah…”

Let’s not forget the rumors of a bank holiday coming in September either.   It seems it’s all coming together to form the perfect storm doesn’t it?

So what action should a person take?   I’ll repost this one last time:

When people realize that the money they thought they had in the stock market is gone, when they realize that their credit lines have been cut and when they have no cash on hand left to pay for fuel, groceries or medicine there will be a stampede at your local bank.   The first ones to get there and pull out some or all of their cash will get their money; the lazy, the ignorant, the socialized, the optimists, and the clueless will be left cashless.

You’ve seen this governments response to crisis already and it’s not exactly a positive record: 9/11, Katrina, Bailout.  Don’t expect air drops of food and water anytime soon when you run out of credit and cash.

I’ll repeat what I posted earlier numerous times here, here, and here.

  1. Keep your payroll check in MULTIPLE bank accounts
  2. Keep some amount of emergency funds in your home somewhere safe and sound, don’t assume ATM machines will have cash.
  3. Keep your savings in a SEPARATE account.
  4. Keep well under the 100k limit of FDIC and don’t assume FDIC will bail you out; you’ll learn why later
  5. Forget about money market funds
  6. You should already have a large cash position if investing in the market, if not you’re going to have to ride it out
  7. Keep plenty of food available in your home
  8. Keep you gas tank full at all times when possible
  9. Be vigilant at all times; worry about burglary, robbery and assault at any time from now on until this crisis is over
  10. Have a worse case scenario plan for yourself and your family
  11. If you have large amounts of money buy US Treasuries.
  12. <Added Today> Worry about the “safety” of your safe deposit boxes at the bank and rethink if that’s the best place for your property.