Wednesday, August 27, 2008

FDIC Increases Loss Estimate for IndyMac

Very interesting report from the FDIC via Reuters:

The Federal Deposit Insurance Corp said on Tuesday it now expects IndyMac's failure in July to cost its insurance fund $8.9 billion, compared with the previous expected range of $4 billion to $8 billion...

Diane Ellis, the FDIC's associate director of financial-risk management, said IndyMac's expected hit to the fund blossomed because analysts have had more time to value IndyMac's assets and have assigned some higher loss rates.

Also, some deposits that the FDIC originally thought were uninsured are actually insured, Ellis said.

Note the last paragraph. Did a depositor have a powerful attorney that explained how an uninsured deposit became an insured deposit? Remember this is an $8 billion plus hit for the FDIC, so when they bring up a change in insured they aren't talking a $100,000 difference or even juat a millon dollar difference.

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