Top Economist, Nouriel Roubini, Says American Depositors Should Worry
The “run” could continue once more Americans realize the Federal Deposit Insurance Corporation has only about $50 billion to “insure” about $1 trillion in assets at the nation’s financial institutions.
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15 September 2008
A top economist said Monday Americans with money in the bank should be concerned about their deposited assets, a warning that comes on the heels of another massive financial institution failure.
As the “financial storm of the century” sweeps the nation, led mostly by home foreclosures stemming from borrowers who took out subprime notes that suddenly came due, Americans are increasingly worried about their savings - and with good reason, says Nouriel Roubini, of NYU’s Stern School and RGE Monitor.
The “run” could continue once more Americans realize the Federal Deposit Insurance Corporation has only about $50 billion to “insure” about $1 trillion in assets at the nation’s financial institutions.
Roubini says the FDIC is “going to run out of money” unless Congress acts soon to recapitalize it.
Meanwhile, however, the federal government tried to assuage Americans’ concerned.
“The banking system is safe and sound,” Treasury Secretary Hank Paulson declared at a mid-afternoon press conference Monday.
“Nothing is more important than the stability and orderliness of our financial markets [and] regulators remain vigilant,” he said.
“We’re working through a difficult period in our financial markets right now as we work of some of the past excesses, but the American people can remain confident in the soundness and resilience of our financial system.”