* WASHINGTON (12/22/09)--Financial industry observers said that the Federal Deposit Insurance Corp. (FDIC) should help financial institutions that are in trouble instead of letting them fail. The problem is that buyers are scared away from purchasing open and operating institutions when the FDIC sells failed banks’ deposits cheaply and guarantees their losses, observers noted (America Banker
Dec. 22). If the FDIC provided open-bank assistance in a few cases, the failures could slow and the government could save money. It could be the “least-cost” solution in some cases, said Ron Glancz, partner at Venable LLP. Lawmakers need to help the FDIC prop up institutions, because they cannot do open-bank assistance under the current law. Banking agencies can encourage more private capital investment in banks, he added. Tom Vartanian, former Federal Home Loan Bank Board senior official, said the FDIC should use its systemic risk exception to help small institutions. If 500 community banks fail, there’s an impact in 500 communities and in the FDIC, he added. The FDIC has said it is not going to help openly troubled institutions. The FDIC can’t assist an “open institutions absent a systemic risk determination,” FDIC Chair Sheila Bair said earlier this month ... * WASHINGTON (12/22/09)--Treasury inflation protected securities (TIPS) indicate that Federal Reserve Board Chairman Ben Bernanke won the battle with deflation, Bloomberg News
reported Monday. The gap between yields on Treasuries and TIPS due in 10 years--which measures the outlook for consumer prices--closed about 2.25 percentage points four days last week--the longest stretch since August 2008. Bernanke has said that tame inflation expectations have kept the target interest rates for overnight loans between banks at 0% to 0.25%. But, TIPS indicate that there may be more losses in bonds. Yields on the 10-year Treasury note hit 3.62% last week ... * WASHINGTON (12/22/09)--The Federal Bureau of Investigation released a preliminary semiannual uniform crime report, indicated that violent crime in the nation decreased by 4.4% and the volume of property crime declined 6.1%. The report
is based on information from law enforcement agencies ...