FDIC, Banks, Prepay On Deposit Insurance Premiums

The FDIC is seeking advancement on the next three years worth of insurance premiums from banks in order to help the FDIC fund, which has been stressed to the max by an overwhelming amount of bank failures. The FDIC fund has dropped from $45 billion to $10 billion while trying to keep up with sinking banks in the wake of the recession and the estimated expenses for helping those banks seem to be more than originally thought.

The FDIC says this advancement will put no undue strains on the banks because they will be able to pay the three years worth of premiums out of reserves and in turn will not affect finances or lending.

When the FDIC proposed the prepay on insurance premiums note was made of how much profit the banking industry had made up until the recession and how little they have paid to the FDIC. The report said the banking industry, on average, made $142 billion yearly and paid the FDIC insurance fund only $170 million a year.

The FDIC could have tapped into a line of credit with the Department of Treasury but FDIC chairman Sheila Bair said that the banking industry now has the resources to deal with the FDIC fund issue, so that is where they are looking in order to correct the problem rather than seek aid from the federal government because many would see it as another tax-payer bailout.

This solution by the FDIC has generated little argument, but after saving 95 banks this year it would seem that whatever the FDIC asks from its insured banks should be granted.  As we continue to get closer to the middle of February 2012 some may start their search for California Sears Kenmore Presidents Day Sales 2012.  Remember that Presidents Day will be one week after Valentines Day this year so there are sure to be some great sales and deals.

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