The Debts of the Spenders: Overnight Fed Loan Hits 7% While FDIC Closes 6 IL Banks

Karl Denniger of Market Ticker first pointed out the alarming 7% overnight loan made at the Fed discount window early Thursday morning.

When the Discount Rate is 0.5% and you pay 7% there is only one reason: Whatever you have won't qual for the discount window. And since they will take goddamn near anything, it means YOU ARE ****ED.

http://market-ticker.org/archives/1177-BOOM!-More-Obfuscation.html

For the actual Fed loan:

http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm

MEANWHILE.... the FDIC closed 7 banks on Thursday - 6 of them in Illinois. The Chicago Tribune recently reported that ALL 6 of the IL banks belong to the SAME company: the Campbell Group.

Moreover, the FDIC explicitly stated that the root cause of the IL banking failures was primarily on losses stemming from CDOs.

Hmmm, coincidence?

Founders Bank had gone on a search to try to raise about $50 million in capital after suffering securities losses in the first quarter and falling to an "undercapitalized" status.

The failure of the Campbell family's bank resulted primarily from losses on investments in risky instruments known as collateralized debt obligations and other loan losses, the FDIC said.

http://www.chicagotribune.com/business/chi-fri-failed-banks-0703-jul03%2C0%2C3186096.story