FDIC Friday Warmup: Agency May Draw Funds from U.S. Treasury
September 18th, 2009Via: Reuters:
U.S. bank regulators will meet at the end of the month to explore options, including some that are not well-known, to replenish the dwindling fund that safeguards bank deposits, the chairman of the Federal Deposit Insurance Corp said on Friday.
Chairman Sheila Bair said the agency would put out for public comment the options to rebuild the fund — which has been significantly drained by a sharp increase in bank failures — including tapping the FDIC’s line of credit with the U.S. Treasury.
“We are carefully considering all our options, including borrowing from Treasury,” Bair said at a global finance summit in Washington.
She said the FDIC also had lesser-known alternatives for replenishing the fund, such as prepayments of assessments on banks and issuing a note. She did not give further details on those options.
So far this year 92 U.S. banks have failed, compared with 25 during all of last year and only three in 2007. Those failures have brought the balance of the insurance fund down to $10.4 billion from $45 billion a year ago. But the FDIC is careful to note that it has $42 billion in reserves to handle failures over the next year.
Hahahahaha…. nothing to worry about, we have enough reserves.
What?!