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News Link • Federal Reserve

There May be a New Bond in Town...

• Economic Policy Journal
Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
 Since this, in extension, is a liability on the balance sheets of banks (because they have to pay a larger FDIC fee for the FDIC to be able to pay them back the money that has been lent to it), wouldn't that mean that the FDIC is now competing with the Federal Reserve (sort of)? Also, if you have something on both the asset and liability side of your balance sheet, doesn't that simply make it null and void? This would mean that the money borrowed to the FDIC does not exist, nor has it ever existed. I wonder how much money the US banking sector is going to "imagine" into existence...

This is completely bonkers.

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