FDIC Will Keep Backstopping Banks... Just In Case

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The FDIC, already strained as its reserve fund dwindles, may be getting an extension on its temporary loan guarantee program.

The move is a preventative measure in case another crisis (cough, commercial real estate) happens again:

Bloomberg: The House Financial Services Committee today approved an amendment, introduced by Chairman Barney Frank, to a systemic- risk bill giving the FDIC power to guarantee the debt of solvent banks and other financial institutions, modelled on the short- term program set up last year to spur lending.

“It’s an extension of a program that worked fairly well,” Frank, a Massachusetts Democrat, said during debate. The FDIC program “made a profit for the federal government.”

Frank makes a point that funds for the program will not come from the current reserve fund the FDIC has.

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