The FDIC stands for ”Federal Deposit Insurance Corporation” and is the United States government corporation in charge of deposit insurance. If you have your money in the bank and your bank fail, the FDIC insures that you get your money back. There are equivalents to the FDIC in almost all countries at least in the western world.
“The Federal Deposit Insurance Corp. proposed asking banks to prepay three years of premiums to replenish reserves dented by a rash of bank failures that the agency said will cost $100 billion through 2013.
The insurance fund will run a deficit as of tomorrow after 120 banks failed in the past two years, the agency said today.”
- Bloomberg.com
“Depositors’ money is guaranteed — up to $250,000 per account — by the FDIC. It would be the first time the agency has required prepaid insurance fees.
95 banks have failed so far this year as losses have mounted on commercial real estate and other soured loans amid the most severe financial climate in decades. That has cost the fund about $25 billion, the FDIC said Tuesday.”
- MSNBC
You have to ask yourself: is my money safe at the bank? Take this article into consideration when you answer that:
“The FDIC insures 8,246 institutions, with $13.5 trillion in assets. Not all of them are going bankrupt, of course. Yet as of late July, a disturbing 64 banks had gone belly up this year – the most since 1992 – costing the FDIC $12.5 billion. At the end of Q1, the agency was already asking for emergency funding.
…
And worse, much worse, is likely yet to come. The following chart shows the total assets on the books of the FDIC’s list of 305 troubled banks. The list doesn’t include the biggest banks that are considered too big to fail, as they are being separately supported with bailouts. By contrast, if the banks on this list fail, the FDIC is on the hook to have to step in and take them over and, of course, make depositors whole.”
“From almost $60 billion last fall, the FDIC’s reserves have been drawn down to only about $13 billion today, a 16-year low. A quick look at the FDIC’s own data shows us how inadequate those reserves are compared to the deposits they are now insuring.”
“As you can see, the Federal Deposit Insurance Corporation currently covers each dollar on deposit with a trivial 2/10ths of a penny.”
Read the entire article here: The FDIC is in Trouble, by Bud Conrad.
