FDIC Needs Money to Save the Bank Insurance Fund

The FDIC may need bailout.The government insurance fund that provides bank customers deposits protection up to $250,000 is running out of money. The government agency is seeking to borrow billions from healthy banks  Or it may consider charging a special fee on the banking industry as a whole.

The FDIC a variety of options to raise the funds including. Borrowing  money from the banks takes away from private investment. A second option would charge the banking industry as a whole could shut down less viable financial institutions.  A third option would borrow directly from the the Federal Treasury which will remind the of public another government bailout.

The fourth option  is having the banks pay their premiums in advance that would would cause an undue burden for banks and will not solve the FDIC’s problems.

The bottom line is, there’s no good solution,” said Jaret Seiberg, an analyst with the research firm Concept Capital. “This is a fight over which option is least bad.”

The FDIC may make an decision during a meeting  next week,  the agency may consider combining two of them.  In the last two years the FDIC insurance fund been shrinking due to the many back take over and closing in some cases. This is the largest depletion of the fund since the last banking crisis back in 1992.

Yahoo News has the rest of the story.


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