Kansas Bankers Surety Exits Bank Deposit Insurance Market

Kansas Bankers Surety will no longer insure bank deposits above the $100,000 FDIC level in 38 states. Berkshire-owned Kansas Bankers Surety unceremoniously left the bank depositor insurance business by the side of the road today, supposedly on Warren Buffett’s say-so.

Kansas Bankers Surety Confidence Lost

Bloomberg reported today that Warren Buffet himself ordered Kansas Bankers Surety, a Bershire owned company to get out of the business of insuring bank deposits over $100,000. This is a clear indication to anyone watching, the Oracle from Omaha really dislikes the chances of regional banks to weather this current financial storm.

I find it a little telling that this announcement comes on the heels of Hank Paulson’s GSE takeover announcement on Sunday.

Buffett knows the regional banks are heavily invested in Fannie and Freddie stock (which for all practical purposes got wiped out), so Paulson’s bailout would put many regional banks already on tilt over the edge. Paulson himself recognized the risk and said the Fed and Treasury would “work with” the banks impacted by this gut-punch to the balance sheet to help them through it.

I guess Warren Buffet does trust Hank Paulson…

Well, he’s not alone. I don’t trust him either. The regional banks are going to get hit hard by this deal. Many more are going to fail, but one thing is for sure…

They won’t take Buffet or Kansas Bankers Surety down with them….

Good Luck!

Author: The Mortgage Insider

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Tagged with: Bank Deposits • Depositor Insurance • FDIC • Regional Banks

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