Big Bank, Little Bank, Red Bank, Blue Bank

It was the end of the savings-and-loan crisis in the 90's that was probably deemed the worse bank crisis since the Great Depression (it's funny how names have a way of sticking around)! But we are yet again in another banking crisis, and it's a day late and a dollar short to play the blame game. Now, the nation-wide focus is fixing what has been broken. Liberal ideas differ from conservatives, tea-partiers, and Obama-followers... they all weigh in with a different tone as to what needs to be done with big banks and small banks alike.

But the effects felt on smaller banks are much different than the monsters who have too much weight to actually tumble to the ground. Yes, it's the locally beloved banks that are taking the brunt of the crisis. But alas, should we forget how disgustingly interconnected all of this is. One small bank fails, we all shutter. AP News reported that bank failures have cost the FDIC's (Federal Deposit Insurance Corp) fund that insures deposits an estimated $25 billion this ear and are expected to cost $100 billion through 2013. To replenish the fund, the agency wants backs to pay in advance $45 billion in premiums that would have been due over the next 3 years.

The article explains that when a bank closes, the FDIC swoops in and sells the bank's assets in what it's currently worth to buyers. And here is where we stumble on our next problem: who is buying bank assets now-a-days??? People are steering clear from them like they do a tattooed man in prison garb.

"Smaller banks have been undone by something more conventional - real estate, construction and industrial loans that have soured as the recession has deepened. Defaults are up as developers abandon failing projects and landlords can't meet their loan payments."

And when troubled banks stay open, they grow in the potential to loose substantially more, and draining the FDIC that much more deeply. In a way, it is in the FDIC's best interest to close failing banks, but a wide-spread bank closure would no-doubt cause panic among society, and would also be a big, ogar-like foot stomping on an already unstable plane. Local communities that depend on local banks (where everyone knows your name like CHEERS) want to avoid the ripple effect of their town loosing its main source of consumer and business credit.