After years of insuring bad lenders with trivial premiums and incompetent, almost non-existent oversight, the FDIC is now insolvent.
Mish has it exactly right:
The FDIC is now deep in the red and the situation is getting worse every week. The situation would be even worse were it not for widespread "extend and pretend" tactics that keep woefully insolvent banks in business.
To address the situation, the FDIC is going to start selling U.S.-guaranteed FDIC senior certificates. However, it has no Congressional authority to do so according to former thrift regulator William Black.
Black claims an "unlimited taxpayer bailout" of the FDIC is on the way.
And as we pointed out at the time, what on earth was Sheila Bair doing handing out a half billion dollars for no reason to wealthy, uninsured depositors at IndyMac?
Congratulations, Sheila Bair! You screwed America.