With the closure of nine banks in California, Illionis, Texas, and Arizona the FDIC is now in the red. The FDIC is now out of funds and will be borrowing from the Federal Government. Likely the bailout money will be going to the FDIC. This is probably the best use of the bailout funds yet. The FDIC limits were increased from 100k to 250k when the financial crisis hit. The FDIC did not collect enough money from the banks in the case that there would be 100 or more failures. Just like the Titanic this could never happen, right? Well as it stands there have been over 115 failed banks. In this latest episode Minnesota based U.S. has stepped into relieve many of the banks closed on Friday.

This is significant news now that the agency that is in charge of guaranteeing depositors money in banks is now in trouble. We have seen Freddie Mac and Fannie May take massive hits at the beginning of the credit crunch and most recently the FHA. The government organizations are in trouble and this is something that should raise concern. We have talked about Black Mondays and after a Halloween with 9 bank closures it would seem the potential for a big move down would be strong. However, the markets opened up +100 points on the Dow Jones. Since then the market has slide back to the opening, but going long stocks now would be very concerning. The currency markets are likely going to have some wild swings in volatility as this excitement continues