As I have written for years, the FDIC has been underfunded and bankrupt for too long. Sadly, the FDIC (Federal Deposit Insurance Corp.) was set up shortly after the end of the last Great Depression (1929 - 1939) to "insure" bank accounts for customers throughout our great nation.

Since our banking system is actually considered a "Fractional Reserve System" as banks lend out up to 20 to 50 times the actual amount of their deposited funds via leveraged consumer, business, and real estate loans, the safety of our money in banks throughout America is potentially at greater risk than ever before in the history of American banking.

Remember, most banks maintain at or near ZERO PERCENT cash reserves in their respective bank branches. Sadly, most of these cash reserves are held in the form of ATM or minimal bank vault money. Historically, most banks used to maintain anywhere between 3% to 10% of their funds as "cash reserves" (or cash on hand).

Today, the FDIC may release their 2nd Quarter report if they don't delay it for "special reasons" (i.e. the report is so negative that they don't want to cause a massive run on the banks for deposits). Within this anticipated FDIC report, they may list numerous banks which they deem as "bad banks". Many financial analysts are predicting over 100+ banks may be taken over by the government in the near term as they are technically insolvent.

In addition, the Federal Reserve must release (based upon a Federal Judg's ruling) the list of all of their anonymous loans to big banks, investment banks, and other businesses since last Fall via their eleven (11) different anonymous lending "auctions".

These emergency lending facilities include The Term Auction Facility and The Term Securities Lending Facility. According to the Federal Judge, the Fed must release their billions or trillions in emergency loans by the end of this week or early next week.

As a result of both the release of the Federal Reserve's emergency loans to lenders as well as the anticipated negative FDIC report, I expect many banks to be taken over in the near term. I also expect many banks to be forced to liquidate or sell off their prime assets (i.e. real estate properties and mortgages) for whatever price they can get for the much needed cash.

We will continue to search for the best upcoming foreclosure deals for our clients as banks may be forced to take just about any price possible in the near term. How does 5 to 10 cents on the dollar for a prime Southern California home sound to you?