Although in my estimation the bailout saved GMAC's lending arm, I was correct in this article's prediction (“WaMu Gets the FDIC WHAM-O!“) that there have only been a few minor bank failures in the last few weeks. I expect a drought of closures with a possible drizzle (one or at most two minor banks) until November 4th, after that, regardless of the bailout expect a steady drizzle and possible downpour (few more major banks and a bunch of smaller ones to kick the bucket) before we close 2008.

With the addition of the three banks below, the Bank Body Count (BBC) for 2008 now stands at 16:

Alpha Bank and Trust, Alpharetta, Georgia ($354 million in assets, ~$3 million in uninsured deposits, ~$158 million cost to the FDIC) Date of Demise: 10/24/2008

Meridian Bank, Eldred, Illinois ($39 million in assets, ~$14 million cost to the FDIC) Date of Demise: 10/10/2008

Main Street Bank, Northville, Michigan ($98 million in assets, ~$36 million cost to the FDIC) Date of Demise: 10/10/2008

Again, HAVE YOU PROTECTED YOURSELF?

First understand the FDIC and the nature of the banking system. Here's the fastest lesson I can manage. Try my other writings or just search the net for more information.

In brief, the FDIC is a relic of the Great Depression designed to give depositors the assurance that the government will bail them out if the bank fails. It is funded by small fees on all deposits its member banks hold. The FDIC started 2008 with about $53 billion in reserves. Due to the failures at IndyMac and others, the FDIC fund most likely has about $40 billion left. In August, the Federal Reserve reported that all savings deposits, small-denomination time deposits, and retail money funds (more or less the banking system insured by the FDIC) was $6,414 billion. So if bank failures exceed just half-of-a-percent of the system, the FDIC will be broke. That is, until the government decides to unwisely print more money (aka debase the dollar or inflation or indirectly tax us) or directly tax us, the taxpayers, yet again.

Our banking system operates on a fractional reserve system. This means that banks only have to keep a certain amount of deposits and can lend the rest. In the USA, the deposit requirement is just 10%. For more detail, read this.

Next, the American banking system is in serious trouble. Check out this graph of Non-Borrowed Reserves of Depository Institutions from the Federal Reserve. (BOO! Hahahaha! Happy Halloween!) Note the plummet in 2008 from, historically speaking, a fairly stable chart. What the chart means is that, as a whole, American banks are borrowing from the Federal Reserve in order to maintain their deposit requirements. The shift from +$40 billion to -$187 billion is $227 billion, which is greater than 1% of our GDP (which is the total market value of all goods and services produced in our country this year). This may at first sound insignificant to some of you, but I tend to agree with the degree of angst the Financial Ninja expresses here: “Oh sweet baby Jesus, you better hope Ben Helicopter' Bernanke really really knows what he's doing.” Of course, which banks are doing poorly is a closely guarded Fed secret, but please keep in mind there are 117 banks on the FDIC's secret crash list, out of a total of 8500 FDIC-insured banks. The FDIC updates the number of banks monthly, but do not list any specific banks as this would cause bank runs. (I note that due to the election/crisis, the FDIC has skipped the September and will skip the October end-of-month updates. It does not take a genius to figure out the number is increasing.)

I also note that the Federal Reserve M1 statistic's annualized rate for the past 3 months is at nearly 20%. This is highly unusual. Since M1 is primarily the actual cash and coin in circulation, this may mean that people (I hope Americans, but could just as well be foreigners) are removing their money from banks accounts.

After the last four bank closure articles, I no longer hesitate to hand out advice since when you paint a bleak picture, ideas to look into are a good idea. Otherwise I would seem a bit like Chicken Little running around with his head cut off, so here you go! (I've made some changes in bold since last time) Take a look and decide for yourself, but all of my advice is fairly conservative. Remember, this is not a time to be placid and just mull around, it is time to be realistic, do some research and take action if necessary. Please protect yourself and your family.

First know if your bank(s) are FDIC insured or not. If not, get your money and close the account ASAP as its a sign that the FDIC may have refused to insure it. If yes, you can read the FDIC rules here, and see if any of the exceptions or limits apply to your family. Second, consider moving your money to multiple banks in the event one would fail. This is called diversification of risk. At any bank, you can request their financial statement and check out the status of their loans and deposits. In general, credit unions will be safer than larger banks, mainly since its loans are limited to only the union members. Large banks like Bank of America, Wells Fargo, Citibank, Wachovia, etc. loan out to a wide range of borrowers, which are subject to failure due to the housing crisis. Third, withdraw enough currency to cover expenses for AT LEAST several months. At this point, I urge you to decide for yourself if removing more is prudent and necessary. My reasoning for this is that even if all of your money is FDIC insured, if the bank fails, there is no guarantee you will get your money immediately. It may take months. If you decide to do this, it is best to also request small bills ($20 or smaller) as if a crisis develops larger denominations some vendors may have issues with handling $50 or $100 bills. Instead of paper money, I advise taking out nickels as the worth of the metal matches the face value, where the paper money has no intrinsic value. It's also fairly amusing and trust me, it will take a thief quite a while to lug out several thousand dollars in nickels. Fourth, try reading the Money Matrix series below. Decide for yourself what to do to protect your family's financial well-being. I also highly recommend the well-informed monetary policy articles from fellow Nolan Chart columnist Republicae. They take a little while to absorb though. Five, take a solid look at purchasing physical gold. This will maintain purchasing power in case hyperinflation occurs. Likewise, have a stock of nonperishable foods and water. Trust me, no Americans, including myself, fully appreciate the shocking, disorienting speed at which hyperinflation can hit. Unfortunately, our government has been priming the pump for exactly this to happen. Remember I wrote this when they want to “save” us again.

Six, spread the word. For obvious reasons, you won't find this advice from the mainstream media.

If you want a political solution to this, I am sorry to say it will not be McBama. I am sorry to say your vote on the Fourth of November will not solve ANY of our economic ills. Try www.CampaignForLiberty.com. Mark my words, watch the movie “V for Vendetta” if you haven't already to fully understand this Guy Fawkes Day poem:

Remember, remember the Fifth of November,

the Gunpowder Treason and Plot,

I see no reason why Gunpowder Treason should ever be forgot.

Guy Fawkes, t’was his intent to blow up King and Parliament.

Three score barrels were laid below to prove old England’s overthrow;

By God’s mercy he was catch’d with a dark lantern and lighted match.

Holloa boys, holloa boys, let the bells ring.

Holloa boys, holloa boys, God save the King! Hip hip hoorah!

A penny loaf to feed the Pope

A farthing o’ cheese to choke him.

A pint of beer to rinse it down.

A faggot of sticks to burn him.

Burn him in a tub of tar.

Burn him like a blazing star.

Burn his body from his head.

Then we’ll say ol’ Pope is dead.

Hip hip hoorah!

Hip hip hoorah hoorah!

In case your imagination is lacking, the Federal Reserve System is America's monetary Pope. Death to Faith in Fiat!

Happy Halloween, bwaaaa-ha-ha-ha-ha!:)

In Liberty,

Jake, the Champion of the Constitution

www.CampaignForLiberty.com

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

________________________________________________________________

Police State Stomps on Iraq Veteran's Face as McBama Sanctions Attack on Freedom of Speech: The Story of the Hempstead 15 (Part 1/2)

Published: October 25, 2008

What? Yet another event the media completely missed? After multiple attempts to engage McBama to answer their questions, the Iraq Veterans Against the War (IVAW) led a peaceful march on the last McCain-Obama Presidential Debate and were met with 30 mounted police and a horde of others in riot gear. The mounted police stamped on an Iraq war veteran's face and attacked the crowd. Ron Paul supporter and veteran Adam Kokesh was arrested as well.

________________________________________________________________

Other “oooh-I'm-So-Scared-of-the-Fed-Time-to-Change-the-Diapers!” Articles by the Author [Reach the Author Here!]

Calling All Wheelbarrows: Hyperinflation in America? (Part 2/2)

Published: July 16, 2008

“Let it not be said that No One Cared, that No One Objected, once it is realized that our Liberties and our Wealth are in Jeopardy.” – Dr. Ron Paul

NY Times Reports the Banks Say They Will Hoard their Bailout Cash-Loot

Published: October 23, 2008

And how to strike back.

An Anti-Ron Paul Deflationary Economic Theory

Published: October 21, 2008

Can you prove me wrong? A simple idea about how the bailout could lead to a deflationary, rather than inflationary environment, proving Ron Paul dead wrong.

Terrorist Completes Ultramarathon! And Gold Hits New Highs!

Published: October 19, 2008

Starting in Kuala Lampur in the morning, and finishing in Shanghai at night, some dude manages to finish his first-ever multiple-country ultramarathon and shares his thoughts on the financial crisis and gold.

Fight the Gestapo Tactics of our Congress, McBama, and Bush with Ron Paul and I

Published: October 3, 2008

A plea to readers on the passing of the Paulson Plan, Ron Paul's Congressional statement today, my recommended actions to take, and in support of BJ Lawson for Congress. Just updated with a link to and discussion on the 442-page bailout!

Save Ron Paul's Voice – A Money Matrix Addendum

Published: September 28, 2008

Learn how by reading. Article is intended as a poke-in-the-eye for members of the Ron Paul Revolution who complain about the bailouts and the financial, banking, and housing crises and do not realize that they may in fact be hypocrites.

Henry Paulson – A Quick Look at the Man

Published: September 27, 2008

Everyone in the country is talking about the Paulson Plan, wherein one clause would make Paulson de-facto financial dictator of the United States, accountable to no one. The article is a summary of my brief investigation and asks for help in finding out WHO IS THIS GUY?

WaMu Gets the FDIC WHAM-O!

Published: September 26, 2008

The Seattle-based Washington Mutual Bank is shut down by the FDIC. The Raiders from the last Great Depression, JP Morgan, Strike Again. Have you protected yourself?

A Money Matrix Addendum: Citigroup and GATA Call for an End to the Suppression of the Gold Market

Published: September 22, 2008

The Suppression of the Gold Market Goes Mainstream, Thanks to Citigroup. And a few interesting back-of-envelope calculations about where the price of gold could go.

Yes, West Virginia, There is a Banking, Housing, and Financial Crisis – FDIC Closes Ameribank

Published: September 22, 2008

FDIC Closes Bank #12 for 2008, Ameribank, a Small WV Bank Gets the Axe. Have you protected your family? Learn how.

US Treasury Seizes Fannie Mae and Freddie Mac! And What It Means

Published: September 8, 2008

“You poor kid, there have been centuries of philosophers plotting to turn the world into just that – to destroy people's minds by making them believe that that's what they are seeing. But you don't have to accept it. You don't have to see through the eyes of others, hold on to yours, stand on your own judgment, you know what that is, IS – say it aloud, like the holiest of prayers, and don't let anyone tell you otherwise.” – Ayn Rand

FDIC Closes the Silver State Bank in Nevada as a McCain Resigns in Disgrace

Published: September 7, 2008

Andrew McCain, son of John McCain, resigns from the board just before yet another small bank goes under. $20 million in uninsured deposits lost. And by the way, did you know the American banking system may crash? Learn how to protect yourself and your family.

________________________________________________________________

The Money Matrix Series

America, Were Michael Phelps' Eight Olympic Gold Medals Worth Winning?

Published: August 24, 2008

Michael Phelps and other American athletes are bringing back loads of Gold, Silver, and Bronze Medals from the Beijing Olympics. A young libertarian economist asks if it was worth it.

The Money Matrix – Prelude (PART 1/15)

Published: August 1, 2008

Prelude and Source List to a Series on Global Monetary Policy of Control and Explaining Big Government's Finances

The Money Matrix – What is a Dollar Bill Worth? (PART 2/15)

Published: August 2, 2008

“Living so free is a tragedy when you can't see what you need to see!” – Powerman 5000 'Free'

The Money Matrix – What Makes Money Money? (PART 3/15)

Published: August 3, 2008

A quick history of money per Rothbard followed by the properties of money per Ron Paul

The Money Matrix – If You Don't Know Who the Sucker Is, Then It's You! (PART 4/15)

Published: August 7, 2008

The Money Matrix series rolls on by asking 'What are the Types of Money?' and 'What is the “Best” Currency and Why?'

The Money Matrix Explores Seigniorage – Do not give in to evil, but proceed ever more boldly against it. (PART 5/15)

Published: August 24, 2008

The Money Matrix explores Seigniorage as Legalized Silent Plunder with an introduction into medieval and modern banking.