FDIC Chairman's Statement on the Temporary Liquidity Guarantee Program | WHAT REALLY HAPPENED

FDIC Chairman's Statement on the Temporary Liquidity Guarantee Program

The Temporary Liquidity Guarantee Program is designed to relieve the crisis in the credit markets and give healthy banks access to liquidity in two ways. First, the FDIC has guaranteed new, senior unsecured debt issued by a bank, thrift or holding company, which will help banks fund their operations. Debt that is issued by the end of June 2009 will be fully guaranteed by the FDIC to June 2012, which should provide investors with the comfort necessary to invest in longer-term obligations of financial institutions.

Holy smoke! I just learned this is being applied to GE corporate debt too, and anyone else that can call themselves a bank. The risk for FDIC is way above the stratosphere. The FDIC essentially has entered into the credit default swaps business as of October 23!

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