Under the shadow of the deteriorating global economy, the US is considering two more steps to assuage markets, the Wall Street Journal reports: guaranteeing billions in bank debt and insuring all US bank deposits. Either move is an aggressive step, and in tandem they would mark Wasington's largest intervention yet into the financial markets.
The G-7 meets today in Washington to discuss the British plan to insure $432 billion in bank debt, a plan the Brits would like to see expanded to other countries. In just one kind of US bank debt, $99 billion will come due by the end of the year. The FDIC has $45 billion in reserves to back $5.2 trillion in bank deposits, but raising the cap would expose it to an additional $1.8 trillion.