From Reuters:

Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.

The borrowed money would be repaid once the assets of that failed bank are sold.

“I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses,” Chairman Sheila Bair said in an interview with the paper.

It is troubling indeed when the entity responsible for safeguarding the money we have saved itself is need of money. However, with the bailout of Indymac being more expensive than originally thought, and 117 banks on the FDIC “problem list,” the continuing weaknesses in the U.S. banking system are becoming more and more evident. So, what happens when there is no more money to be borrowed?

@collegeandyonge, originally uploaded by Seeing Is.