This news report is provided courtesy of  Greyson Deitrich III of Independence News LLC.

FDIC Chair Sheila Bair is a recognized non partisan. Appointed to financial oversight positions by both President Bush and President Obama, her outspokenness cuts both ways. Last week in testimony before the Financial Crisis Inquiry Commission, Ms. Bair lit up the room by blaming the credit crisis, and a potential currency crisis on the banking regulatory systems supported by Sen. Chris Dodd and Rep. Barney Frank. Ms. Bair continued by saying the regulations have created a “Shadow Banking” system outside the reach of federal authorities. Bair blamed the Financial Institution Reform, Recovery, Enforcement Act (FIRREA) as well as Federal Deposit Insurance Corporation Improvement Act (FDICIA) of layering “unnecessary burdens” on traditional banks while leaving large opportunities to develop financial institutions outside the law.

In reporting completed by CNBC, The New York Times, and Independence News, The FDIC admits to over 500 banks currently on the imminent failure list. The unofficial number is closer to 2000. 

Bair has teamed with Fed Chairman Ben Bernanke in a desperate attempt to stave off 1.5 million commercial and residential foreclosures, which will topple the failing FDIC system. “Using FDIC funding for system wide support will ultimately re-create the credit crisis.” “We do not have the ability to cover the losses of all FDIC endangered banks” an FDIC representative was quoted. 

This clearly will bring on an economic “Kobayashi Maru”, as the Fed will have to choose among A) borrowing trillions to cover the losses, B) quantitatively ease the problem (print money), or C) just default. Bair has repeatedly warned of this failure extending all the way back to her economic advisory position with Sen. Robert Dole (Ret.)

Sources at the FDIC say unless there is a “holistic approach” to banking regulation – unlikely since the system is designed to benefit a few “Too Big To Fail” institutions, systemic banking losses should be felt in the next “6 to 10 months” with the real crisis arriving just in time for the November elections. Should be quite a show…