What is the FDIC:
The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.
The FDIC is opening a new massive new office in Chicago that will be dedicated to managing receiverships and liquidating assets from failed Midwest banks. This new facility will occupy 7 floors in an 11 floor building. The office space that the FDIC is leasing is well over 100,000 square feet and will employ approximately 500 temporary employees and contractors. This is a huge expenditure by the FDIC. So will there really be so many bank failures over the next couple of years in the Midwest that a 100,000 square foot facility is required to deal with it?
It looks that way because at the same time, a gigantic ”second wave” of adjustable mortgages is scheduled to reset starting this year. This could push the U.S. economy into “part 2″ of the housing crisis. Just check out the chart below….
As you can see in the above chart this year there are tens of billions of dollars more in mortgages that are set to reset 2010 – 2012 (end of 2011 being the worse )
All so keep in mind the US is still currently in recession so people are in much worse circumstances compared to when the 08/09 recession hit, so you can expect this one to be much worse.
In fact, one new study has been released that estimates that 5 million houses and condominiums on which mortgages are now delinquent will go through foreclosure and be put on the market within the next few years.
Another devastating housing crisis would absolutely destroy the vast majority of small to mid-size banks in the United States. In such a scenario, the FDIC would definitely be able to make use of the new facilities that they are opening up around the United States.
There are even rumors that the big bankers do not intend for most small and mid-size bankers to survive the coming crisis. There are whispers that the big bankers see all of this economic turmoil as a great opportunity to “consolidate” the banking industry.
So what should you and your family do to get prepared? Get out of debt and get rid of any unnecessary expenses. Try to start developing alternate streams of income and come up with a plan for what you will do if you lose your job.
