Don't Drop the Soap...

Lots of things to do today so I am going to try and make this update on the bailout quick...

- It is expected that the Senate will later vote on a revised version of the bailout bill.

- The new bill has been revised in two main ways:

1) Increase FDIC deposit insurance from $100,000 to $250,000.
2) Authorizes the FDIC to borrow as much money as needed from the Treasury for one year.

- The DJIA is currently trading at -26.36 (i.e. investors are waiting for more information on whether or not the bill will pass).

- Obama and McCain have both come out in support of the changes.

Bailout Revisions...

In regards to raising the FDIC deposit insurance, that is great. It will increase consumer confidence and help small banks stay in business as depositors won't run to larger banks in such large herds.

As far as authorizing the FDIC access to unlimited Treasury funds in the case that banks continue to fail...

The current $30 billion authorization that the FDIC has access to is basically a pre-approved loan. If they needed more than that, they would get it, although it would have to be approved by congress most likely. In taking off the limit for one year, all that changes is that instead of making them go through an approval process down the line, we are just increasing the limit of the pre-approved loan.

And now for some quick Q & A...

Q: Will these revisions be enough for the bailout to pass?
A: I really, really, hope so.

Q: Will these revisions do any good?
A: Yes. By increasing consumer confidence and increasing coverage of depository accounts from $100,000 to $250,000.

Q: I don't have $250,000, let alone $100,000...
A: Either do I, but hey, at least we can all walk a bit taller now!

Q: Will these revisions address the concerns that opponents of the bailout have?
A: Not really, unless we are talking about...

Q: Will these revisions help current House members seek re-election?
A: Yes.

Q: What will happen if this bill fails yet again?
A: The United States economy is collectively holding a big bar of soap right now. If something doesn't happen soon, we are eventually going to drop that bar of soap. While we might survive, it won't be pretty, and the effects will be with us for a long, long time...

Update: The bill has gone from 2 pages in length, to 110 pages over the weekend, and now stands at 451 pages. I almost don't even want to know what else has been snuck in there. Amazing...

-dunkie