Monday, May 11, 2009

FDIC's New Borrowing Authority

President Obama proposed increasing the FDIC's borrowing capacity to $100 billion. Congress supports this move with legislation, only it adds a kicker that the FDIC can temporarily borrow up to $500 billion in an emergency.

How much FDIC borrowing will turn into government financing of distressed bank takeovers? Will any private equity underwriters benefit from FDIC borrowings?