^{“Is not our first thought to go on the road? The road is our source, our vault of treasures, our wealth. Only on the road does the ‘traveller’ feel like himself, at home.”
Ryszard Kapuscinski}

Took a look just now and it's about $2.50, down over 20% from yesterday's shellacking. I note that they've been selling 12-month 5% CDs online lately...

-5.75,-4.05
"God gives men a brain and a penis, and only enough blood to run one at a time." -- Robin Williams

That's a really good question, and despite the FDIC being backed by the government, seemingly more germane every day.

From last month, we have:

FDIC Warns of More Bank Troubles

ABC NEWS, By Scott Mayerowitz, August 26

The health of U.S. banks is quickly deteriorating, and the government fund set up to protect depositors might not have enough money to insure everybody, analysts told ABCNews.com.

The Federal Deposit Insurance Corporation, or FDIC, insures bank deposits of up to $100,000 at nearly 8,500 of the nation's banks and also keeps a watch list of banks that it considers in trouble.

Thanks to a collapsing housing market and a weak economy, a growing number of banks are struggling to stay afloat, with not enough cash on hand to cover losses from bad loans.

At the beginning of the year, 90 banks were on the FDIC watch list. There are now 117, FDIC chairwoman Sheila C. Bair announced at a news conference this afternoon. That is the highest number in five years, but some analysts expect the list to grow even more in coming months.

However:

"I fully expect the FDIC insurance fund to be depleted," Ryan added. "The FDIC is going to be one of what is going to be an increasing string of government bailouts."

If that happens, ultimately taxpayers will be on the hook. The FDIC borrows money with a line of credit from the U.S. Treasury, which essentially is taxpayer money.

So, probably, they'll just print more money, if they have to.

Just be sure you're within the insured limits.

Disclaimer: this speculation on unfolding developments is not presented as investment advice.

Some have been expecting gold and silver to decline as hedges are forced to deleverage, presenting excellent buying opportunities at support levels. And if things get weird, as they well might, they think that PM's (precious metals) will likely do very well.

Even if this isn't the meltdown, PM's provide insurance with fairly limited risk if bought at lower support levels, and there really isn't much else available with low risk other then T-bills, and the upside potential of PM's is much greater than T-bills if things get bad, thinking that equities and other markets have not yet adequately priced in unfolding risk, especially due to huge lack of transparency in the financial system, coupled with the fact that the powers that be have been bluffing (lying) right up to the very end. (But remember that T bill are denominated in dollars, and every bailout potentially devalues the dollar. PM's are traditionally money. They aren't used as "money" as a medium of exchange because Gresham's law leads to their hoarding as a store of value.)

Translation: It's very likely there's still a load of sh*t to hit the fan that hasn't yet been disclosed, and what we do know is not good and doesn't bode well. Confidence is crashing, and trust is being trashed.

Some folks have been moving 5-20% into physical gold and silver "just in case," and cashing out of other stuff into T-bills for day to day liquidity.

Personally, I think we're in for financial carnage before the election. The Fannie-Freddie deal may be the place where the wheels really come off.

Jim Kunstler - Last Ditch

If all of this wealth-destroying crashing causes the money supply to constrict substantially, that may cause prices in dollars of PMs to drop. In deflation, cash is king.

It seems like we're getting asset deflation and price inflation, which certainly complicates matters.

Treasury, Fed reportedly helping as deal sought by this weekend

MarketWatch, By Alistair Barr, September 11

SAN FRANCISCO -- Lehman Brothers is for sale as Wall Street and financial regulators rush to salvage a once-thriving brokerage firm that's threatened by a potential exodus of clients and trading partners.

Lehman has put itself up for sale and has been calling rival banks, brokerage firms and other potential acquirers, according to three people familiar with the situation.

Suitors include Bank of America, The Wall Street Journal reported, citing unidentified people familiar with the matter. Spokesmen at Lehman and Bank of America declined to comment.

The Treasury Department and the Federal Reserve are helping with the sale, the Washington Post reported, citing sources familiar with the matter. Nothing is finalized and there are several potential outcomes, but a deal is expected to be unveiled this weekend before Asian markets open Monday morning, the newspaper added.
Potential buyers remain wary about troubled assets on Lehman's balance sheet and are increasingly looking to the U.S. government to help backstop any future losses, the Journal said.

Dealbreaker.Com, By John Carney, September 14

We understand that a deal has been reached to divide Lehman Brothers into two entities, with a "bad bank" taking the toxic, real-estate assets amounting to around $85 billion. The deal will be financed without any government backing. Lehman chief executive Dick Fuld will resign.

Bank of America will take the lion's share of the good assets of Lehman, with Barclay's and Nomura playing a role as well. An international consortium of financial firms will inject capital for the deal, preventing Lehman's assets from flooding the market in a fire sale. Many US based firms have not played a large role, in part because they are facing their own financial challenges.

Lehman Heads Toward Brink as Barclays Ends Talks

New York Times, By Ben White and Jenny Anderson, September 14

Unable to find a savior, the troubled investment bank Lehman Brothers appeared headed toward liquidation on Sunday, in what would be one of the biggest failures in Wall Street history.

The fate of Lehman hung in the balance as Federal Reserve officials and the leaders of major financial institutions continued to gather in emergency meetings on Sunday trying to complete a plan to rescue the stricken bank.

But Barclays, considered the leading contender to buy all or part of Lehman, said Sunday that it could not reach a deal without financial support from the federal government or other banks, making a liquidation more likely.

The leading proposal had been to divide Lehman into two entities, a “good bank” and a “bad bank.” Under that scenario, Barclays would have bought the parts of Lehman that have been performing well, while a group of 10 to 15 Wall Street companies would agree to absorb losses from the bank’s troubled assets, according to two people briefed on the proposal. Taxpayer money would not be included in such a deal, they said.

But that plan fell apart on Sunday, making it likely that Lehman would be forced to liquidate.

Barclays Walks from Lehman Deal; Likelihood for Transaction Narrows

WSJ, By Carrick Mollenkam & Matthew Karnitschnig, September 14

The fate of Lehman Brothers Holdings Inc.'s darkened early Sunday afternoon with Barclays PLC, the sole remaining bidder for the 158-year-old Wall Street firm, telling federal regulators that it is walking away from a transaction, people familiar with the matter say.

The situation was rapidly evolving, and it's possible Barclays or another bidder would emerge to save Lehman before markets opened Monday. But with the government balking at putting any taxpayer money at risk for Lehman, the likelihood of a transaction was dimming. That would leave an orderly liquidation as the most likely scenario, a dramatic outcome for a once-powerful firm.

According to people familiar with the situation, a stumbling block is the request that Barclays obtain shareholder approval before it agrees to cover Lehman's contracts with other financial firms. But organizing a shareholder vote would take days if not weeks. U.S. regulators are likely to have known this, raising a question about why this provision emerged late in the talks.

The main stumbling block for any Barclays deal is a reluctance by U.S. regulators to financially back an acquisition or the creation of a so-called "bad bank" to wind down Lehman's assets.

New York Times, By Landon Thomas, Jr., September 16

LONDON — Barclays, a leading British bank, confirmed on Tuesday that it was in talks with Lehman Brothers about “the possible acquisition” of some assets at the American bank, which filed for bankruptcy protection Monday as the financial crisis bit deeper and sent world markets into a tailspin.

In a statement from its London headquarters, Barclays did not give details, saying only that it was discussing “certain Lehman Brothers assets on terms that would be attractive to Barclays shareholders.”

“There can be no assurance that the discussions will result in an agreement,” the statement said.

The discussions, news of which was reported earlier by The Wall Street Journal, followed talks last weekend from which Barclays withdrew.

Reuters & CNBC, September 16

British bank Barclays has agreed to buy Lehman Brothers' core U.S. broker-dealer business for roughly $2 billion, a source familiar with the matter said on Tuesday.

The deal for Lehman's broker-dealer business includes equity, fixed income, M&A advisory and other parts, according to the source, who declined to be identified.

The Motley Fool, By Alex Dumortier, September 17

Before this weekend, Lehman Brothers (NYSE: LEH) had floated a number of ideas to stabilize its business, including spinning off the company’s distressed assets to its shareholders -- the “good bank/bad bank” option. Perhaps this gave Bob Diamond, the president of U.K. bank Barclays (NYSE: BCS), his inspiration for what looks like a brilliant move.

Barclays announced today that it would acquire Lehman’s U.S. broker-dealer subsidiary for $1.75 billion. The deal gives Barclays immediate heft in the U.S. debt and equity capital markets and in providing advice for corporate clients such as General Electric (NYSE: GE) and Hewlett-Packard (NYSE: HPQ) -- a good complement to its existing businesses.

Crucially, the deal, which still requires the approval of the bankruptcy court, doesn’t include any exposure to the $85 billion in toxic assets that were the roadblock in the sale of the entire company. Indeed, Barclays ended talks this weekend to acquire Lehman’s holding company because U.S. authorities were unwilling to provide any guarantees with respect to the firm’s bad assets, as they had in the rescue of Bear Stearns by JPMorgan Chase (NYSE: JPM).

By waiting for the bankruptcy process to play out, Barclays’ Bob Diamond sidesteps that mine and makes away with some of Lehman’s prize assets for a song: $1.75 billion. Deducting the estimated market value of Lehman’s headquarters and two data centers which are included in the transaction ($1.5 billion), he is paying approximately $250 million for a great franchise with good earnings power.