FDIC Low On Funds After Record Bank Failures In 2009

Given how many banks have failed and been taken over by the FDIC this year (84, including three yesterday), it’s not one bit surprising that the FDIC isn’t doing too well, funds-wise. It’s down to $22 billion, the lowest the failed bank fund has been since the savings and loan crisis of the early ’90s, when it needed to borrow money from the Treasury Department to keep going.

That’s unlikely to happen this time—instead, the FDIC plans to keep a closer eye on currently troubled banks, and potentially raise insurance premiums in the future.

FDIC Chairman Sheila Bair said this week that bank failures will remain elevated as banks go through the painful process of recognizing loan losses and cleaning up balance sheets.

The total of 84 failures this year marks a sharp rise over the 25 last year, and the three failures in all of 2007.

She noted that the banking industry’s performance is a lagging indicator and will continue to suffer even as the economy begins to improve.

They’re keeping a more careful eye on new banks, too, changing capitalization requirements in order to prevent more failures.

U.S. bank failure tally rises to 84 for 2009 [Reuters]
Analysts Predict FDIC Will Charge Additional Fees to Prop Up Insurance Fund [American Banking News]
FDIC to Increase Scrutiny of New Banks [Wall Street Journal]

(Photo: Ryan McFarland)

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