FDIC warns US bank deposit insurance fund could tank

[thundley4]

WASHINGTON (AFP) – The US government is warning banks that its deposit insurance fund could go broke this year as bank failures mount.
The head of the Federal Deposit Insurance Corporation, Sheila Bair, in a letter to bank chief executives dated March 2, defended the FDIC's plan to raise fees on banks and assess an emergency fee to shore up the fund and maintain investor confidence.
Bair acknowledged the new fees, announced Friday, would put additional pressure on banks at time of financial crisis and a deepening recession, but insisted they were critical to keep the insurance fund solvent and protect.
"Without these assessments, the deposit insurance fund could become insolvent this year," Bair wrote.
The FDIC chief said in the letter that the rapidly deteriorating economic conditions raised the prospects of "a large number" of bank failures through 2010.

Have Mercy

These  idiots in this administration truly have no clue what is going on.  Nothing will cause the banks to collapse faster than a panicked mass withdrawal of money.  Nothing can fuel that panic quicker than telling the people that their money may not be insured, and more banks are going to fail.

[docstew]

Have Mercy

These  idiots in this administration truly have no clue what is going on.  Nothing will cause the banks to collapse faster than a panicked mass withdrawal of money.  Nothing can fuel that panic quicker than telling the people that their money may not be insured, and more banks are going to fail.

it could be worse... they might WANT that panicked run of people pulling out cash, so that they can nationalize them "to save the industry"...

[rich_t]

it could be worse... they might WANT that panicked run of people pulling out cash, so that they can nationalize them "to save the industry"...

Maybe that is exactly what they want.

I may go the bank next week and pull most of my money out.  Let's get the party started.

[seabelle]

Are credit unions safe?  I hope, I hope 

You would almost think Team Obama's doing this on purpose.  He's pretty calm (can't be a "good" sign).  Afterall, his only influences have been Rev. Wright and Bill Ayers, and we all know they hate America 

[rich_t]

Are credit unions safe?  I hope, I hope 

Is your credit union FDIC insured?

[JohnnyReb]

There seems to have been a slight change made.......but I bet the panic remains.

http://news.yahoo.com/s/ap/20090306/ap_on_bi_ge/fdic_bank_fees

.....and I just parked a pile in FDIC insured CD's for safe keeping.....

My 100% absolute record of giving sound financial advice still stands.....never do what I do, do the opposite.......

[formerlurker]

These  idiots in this administration truly have no clue what is going on.  Nothing will cause the banks to collapse faster than a panicked mass withdrawal of money.  Nothing can fuel that panic quicker than telling the people that their money may not be insured, and more banks are going to fail.

That is exactly what I thought when I read the title of the thread... what on earth are they thinking?

[DumbAss Tanker]

This is actually less drastic and more complex than the press is making it sound.  FDIC is funded by the assessments, if the draw on it exceeds the inputs, it obviously needs more inputs, which has to be announced at some point whether that is going to make the unicorn poop Skittles faster or not.

Yet on top of that, the $250K level also drops back to $100K in coverage in the near future (unless Congress extends it) so just given the same rate of demands for payouts, the maximum liability per claim is about to drop by 60%; hard to say how that is costed in, but I would expect FDIC's projections involve a worst-case (in a purely-technical sense, and strictly from an insurer's point of view) of the maximum limit remaining at $250K.

[Miss Mia]

Are credit unions safe?  I hope, I hope 

Generally yes.  Here's a website to check it out  Bankrate.com

Is your credit union FDIC insured?

No, credit unions are not covered by the FDIC, they are insured by NCUA. 

[docstew]

This is actually less drastic and more complex than the press is making it sound.  FDIC is funded by the assessments, if the draw on it exceeds the inputs, it obviously needs more inputs, which has to be announced at some point whether that is going to make the unicorn poop Skittles faster or not.

Yet on top of that, the $250K level also drops back to $100K in coverage in the near future (unless Congress extends it) so just given the same rate of demands for payouts, the maximum liability per claim is about to drop by 60%; hard to say how that is costed in, but I would expect FDIC's projections involve a worst-case (in a purely-technical sense, and strictly from an insurer's point of view) of the maximum limit remaining at $250K.

the coverage limit's gonna drop?  crash your bank now!! while you'll get more money!!

[DumbAss Tanker]

the coverage limit's gonna drop?  crash your bank now!! while you'll get more money!!

As a colleague of mine used to tactfully say when someone bounced a really off-the-wall idea into him, "It's an approach."

 

[Lacarnut]

With all the scr&w ups by Obama and his administration, I am beginning to wonder if they are not planned. If this was a Repub. regime, the liberal press would be savaging them. As it is, they get a pass.

[ironhorsedriver]

With all the scr&w ups by Obama and his administration, I am beginning to wonder if they are not planned. If this was a Repub. regime, the liberal press would be savaging them. As it is, they get a pass.

Yea, and in only two months. Imagine what four years is going to be like.