The last words you want to see in an appropriations bill from Congress are the words “in case of an emergency” or their twin sister “in the event of extraordinary circumstances“.

When you see those words it is a near certainty that an “emergency” or that “extraordinary circumstances” are right around the corner.

Please consider U.S. panel backs FDIC borrowing.

A key U.S. Senate panel on Tuesday backed proposals to reform credit card practices and increase the authority of regulators to borrow from the Treasury Department to deal with a slew of expected bank failures.

The bill, which was introduced by the committee’s chairman, Christopher Dodd, also contains two provisions aimed at increasing the borrowing authority of regulators, the Federal Deposit Insurance Corp and the National Credit Union Administration.

The provisions, introduced by Republican Senator Mike Crapo of Idaho, would increase the FDIC’s borrowing authority to $100 billion from the current $30 billion to deal with banks and increase the NCUA’s limit to $6 billion from $100 million for nonprofit credit unions.

The provisions also allow the agencies to exceed the new limits through the end of next year for up to $500 billion for the FDIC and $18 billion for the NCUA in the event of extraordinary circumstances.

Congress is out of its collective mind to put such a provision in a bill because “extraordinary circumstances” can mean damn well anything the FDIC wants it to mean.

So please be prepared for $500 billion in “extraordinary circumstances” as it’s a near certainty those funds will be tapped.

Mike “Mish” Shedlock
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