The Federal Deposit Insurance Corp. Needs Cash
FDIC
Insiders say the FDIC is ready to start ordering banks to prepay about $36 billion in premiums to replenish the deposit insurance fund that has been severely depleted by a rash of bank failures.
It would be the first time the FDIC has required prepaid insurance fees. Under the plan, banks would have to pay in advance their insurance premiums for 2010-2012, bringing in about $12 billion for each of the three years.
FDIC Chairman Sheila Bair said earlier this month that she was “considering all options, including borrowing from Treasury,” to replenish the insurance fund. Yet she is generally perceived as considering that the most unpalatable approach.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. The FDIC insures deposits at 8,246 institutions with $13.5 trillion in assets.
New Deposit Insurance Limits – The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor. For more information visit: Deposit Insurance Simplification Fact Sheet.
Insured institutions are required to place signs at their place of business stating that “deposits are backed by the full faith and credit of the United States Government.” Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure. San Francisco real estate
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You know, what ever might be able to help one corner of our economy sounds like a plan, and none the less the banks? Maybe we should have started at the problem long ago.
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We are facing turbulent times with the credit crunch / liquidity crisis, a very possible recession, hedge funds collapsing, small & large banks experiencing major loses and the ups and downs of the bond and stock markets. We need to get the banks up off their knees.
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I was reading the other day that we’ve lost $2.2 trillion in home equity in the US. That’s a lot of money out of economy. I guess we should put some tangible money back in there.
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Instead of giving a bunch of money to different levels of government, why not directly incentivize investors to pick up those houses and get them rehabilitated and back on the market? We all know that local and state governments are not the most efficient handlers of these situations. If they put stuff out for bids, the crisis will be over before they are able to move. If they don’t, they will send work to their friends… regardless of their ability to efficiently do the work.
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