Locking In Bailouts

And when one litte bump leads to shock, miss a beat
You run for cover and there's heat
--The Fixx

ZeroHedge reports that the 2015 federal budget plan jammed thru last nite includes provisions for permitting FDIC insurance to apply to banks failing due to derivative losses.

The big winners are the big banks (who helped craft the legislation, natch), as they own the lion's share of derivatives exposure. The big losers, of course, are taxpayers who foot the bill for the bailouts.

'Taxpayers,' in this case, should be broadly construed. The FDIC is thinly capitalized and could never cover the losses of big bank failures. The only alternative will be to make depositors whole thru money printing.

When this occurs, we all pay the Invisible Tax.