here is another reason the FDIC is broke:
How Many Things Can Go Wrong With This? - Moon Kil Woong -- Seeking Alpha
in part:
On an interesting side note, in the quest for even more leverage, rather than opting for 40-1 ratios the FDIC voted that it's better just having more people offer 10x1 leverage ratios, essentially allowing most anyone to form a bank. As if we don't have enough mismanaged banks around these days?
The FDIC voted 4-1 Wednesday to allow private-equity firms with no history of bank management to maintain a 10% capital-asset ratio and open a bank fully backed and insured by taxpayers’ money. No wonder they warned Congress that they would run out of money and need up to $500 billion more to cover bad banks.
Sure, the FDIC gave their assurances no abuses would occur. After all, what could go wrong with unknown people clamoring to get virtually free government loans insured by the public for virtually nothing, and able to loan it to god knows who for who knows what type of unsavory interest rates? At least it will spur more shady credit cards you can apply to.
The FDIC realizing this is the exact same type of ruling that helped Japan end up with super conglomerates that couldn't make money and had loaned their portfolio out to all their friendly construction companies that had negative net worth, has tried to limit the damage by saying they will regulate it so there can't be this type of abuse. However, in light that no one can even regulate the banks the likelihood of tracking squandered money and shady deals is almost zero.
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