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September 29, 2009 – Banks Prepaying FDIC Fees is Madness

Consumer Confidence, FDIC Madness, Falling Commodities and the Charts for the S&P
500
Consumer Confidence is expected to rise above a reading of 56 for September.
A reading above 56 would be one of those “less bad” readings as the neutral zone for the
Conference Board’s Consumer Confidence is 90 to 120. Strong confidence is a reading above
120.
Confidence is on a slippery slope as consumers try to make ends meet. As more Americans
lose their jobs confidence can easily slide back down that Slippery Slope.
Asking banks to Prepay three years worth of FDIC Fees is MADNESS
There have been 50 bank failures in Q3 since the FDIC told us the Deposit Insurance Fund
was $10.7 billion at the end of Q2. I calculate the DIF to be in arrears by $4.7 billion.
$36 billion in fees is a drop in the bucket for what the FDIC will need to close 500 to 800
banks through 2011. We are at 120 closures and Bank Failure Friday's will continue through
2011 if not longer.

With 37.5% of the 8,145 banks overexposed to C&D and CRE loans the burden of hitting
banks with a three year prepay is madness.
The FDIC should tap the $100 billion line of credit, as they will eventually have to anyway.
Use the temporary $500 billion if necessary.
Yesterday I suggested that the TARP should loan its remaining funds to the FDIC instead of
wasting the money on small community banks that are overexposed to C&D and CRE loans.
Small public and private banks are not prudent investments for tax payers. Providing
protection for $5 trillion in deposits for US citizens is a prudent use of funds.
Let the 8,145 FDIC insured financial institutions pay interest on TARP loaned to the Deposit
Insurance Fund. The FDIC has five years from June 2008 to get the fund back up to 1.15% of
insured deposits.
Comex Copper and Nymex Crude Oil warn that the global growth story is flawed
Copper has failed to sustain gains above its 200-week simple moving average since mid-
August. The weekly chart shifts to negative on a weekly close below the five-week modified
moving average at 272.88.
My annual pivot is 240.20 with the 200-week as resistance at 291.87.
Crude oil already has a negative weekly chart and stays negative on a weekly close below its
five-week simple moving average at $68.42. The 200-week at $75 has been resistance since
mid-June.
My annual pivots at $66.51 and $68.81 have been strong magnets since mid-June.
The daily and weekly charts for the S&P 500
The daily chart for the S&P 500 still shows declining momentum even after Monday’s
rebound, as weakness stayed above the 21-day simple moving average as support at 1041.
The weekly chart for the S&P 500 still shows overbought MOJO with a reading at 9.1 on a
scale of zero to ten. The five-week modified moving average is support at 1029 with weekly
resistance at 1076.
Send me your comments and questions to Rsuttmeier@Gmail.com. For more information on
our products and services visit www.ValuEngine.com
That’s today’s Four in Four. Have a great day.

Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website
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