FDIC Approves An Extended Bailout For Banks

The FDIC guarantees hundreds of billions of dollars of bank debt.

Many of the key bank assets are unable to be valued accurately right now because there's little demand for mortgages, homes, and securities backed by such.

The credit market thawed a tad this year but for all essential purposes, it is still frozen.

Where's the bang for the buck with all these bailouts?

The AP says: The board of the Federal Deposit Insurance Corp. voted to provide the six-month extension in some cases of the temporary program, which ends Oct 31. Established a year ago at the height of the financial crisis, the program was intended to help thaw the freeze in bank-to-bank lending. The credit markets began to revive several months ago.

The FDIC has provided insurance for loans between banks, guaranteeing the new debt in the event of payment default by the issuing bank.

To qualify for the special extension through April 30, banks will have to show they are unable to issue debt without government backing due to circumstances beyond their control. Banks also will have to submit information on collateral they could provide if needed to repay principal and interest payments made by the FDIC. In some cases, the FDIC could impose conditions on the banks such as limiting executive compensation and bonuses or dividend payouts.