12/22/09 Alexandria, Virginia – During the financial crisis the FDIC raised its insurance limits to $250,000 per deposit in order to avoid a modern day bank run. That decision has led to the FDIC guaranteeing a deposit base that’s now 34 percent larger, at $6.1 trillion, with a still rapidly depleting fund. See the chart below, which shows how the deposit insurance fund is currently in the negative.
According to Rolfe Winkler at Reuters:
“So in Q3, the official figure — which includes $250k limits — jumped from $4.8 trillion to $5.3 trillion. Throw in the $761 billion insured by the transaction account guarantee program and you’ve got a total of $6.1 trillion of insured deposits. Compare to Q3 ‘08. Back then, before all the emergency measures, the total was $4.5 trillion. So the [$250k limit] increases added $1.6 trillion, or 34%, to the total…
“But even with that cash [another $45 billion] coming in, the FDIC’s resources are under a lot of pressure. With 552 banks and $346 billion in assets on the “problem” list, FDIC will struggle to pay its bills.”
The news came to our attention via The Business Insider and the complete post is available at the Capital Jungle’s unofficial coverage of the deposit insurance fund.
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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