Breaking news this morning: Tony Snow, former host of Fox News Sunday as well as press secretary under Dubya, died after a second bout with cancer at the age of 53. Love him or hate him there seems to be something totally unfair about a family guy dying. To see him exit stage left so soon after Tim Russert died is almost a slap to the face of news junkies. Obviously my prayers are with his family at this difficult time.
Also dead is Michael DeBakey, the famous heart surgeon, at 99. (Why couldn't he make 100?) He pioneered heart bypass surgery and invented the roller pump and 70 plus other medical instruments commonly used today. Well into the final decade of his life, he was still an active physician, performing a bypass operation on no less than Jerry Lewis two years ago. A life well lived should be rewarded in the hereafter.
Russia and China vetoed comprehensive sanctions against Zimbabwe, in particular the senior leadership there. No surprise there since both countries themselves are dictatorships ... and it sends a very poor signal as we're less than 30 days before the Olympics in Beijing. Clearly Mugabe is being given open license to do whatever the eff he wants. I've said it before and I'll say it again, if someone actually succeeds in bumping him I will not shed a single tear.
Finally, one of the largest mortgage lenders in the US, IndyMac (Independent National Mortgage Corporation) and once part of the troubled Countrywide Group, had its assets seized by federal authorities late last night after a $1.3 billion run on the bank in the last 11 days. The vast majority of depositors have less than $100,000 so are covered by deposit insurance (and those who have more than that will get 50 cents on the dollar on the excess); but this is the second largest failure of a financial institution in the country's history. How a company that was worth $40 billion on the books just three months ago could melt down so quickly is no longer remarkable; it is becoming part for the course.
Many will remember that when a large number of savings and loans (set up rather similar to a credit union, or a building society in the UK; although many have demutualized and have gone public) went under, that one of the deposit insurance set-ups -- the one protecting savings and loans -- itself went bankrupt and was forced to merge with the larger FDIC (which once covered the rear ends of only banks).
Financial institutions are much less regulated in the States than they are in Canada so we may see a bit of a domino effect as some more hailstones hit the ground. More than a few and even the FDIC may be endangered. And since we tend to follow US trends quite a bit, I expect the same to happen in Canada?
So what to do to stem the danger here? Some years ago, the Senate of Canada recommended our deposit insurance system go to a model of "co-insurance" whereby a somewhat larger amount would be guaranteed but if a bank or trust company went under the customer might forfeit some of the deposited amount, say 5%. We did the one thing -- raising the guaranteed amount from $60k to $100k to match the US threshold -- but did nothing about the co-insurance part. It's certainly worth considering. It would require a revamp of CDIC as we know it but to just do nothing is wrong.
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