The AP reports that the
FDIC's reserves are below target levels. Now, that is a long way from being broke, but it is worth a look. It could be especially interesting if Washington Mutual, the nation's largest thrift bank, runs into more trouble.
The AP says:
Treasury Secretary Henry Paulson said Monday that the country's commercial banking system "is safe and sound" and that "the American people can be very, very confident about their accounts in our banking system." FDIC officials also have said 98 percent of U.S. banks still meet regulators' standards for adequate capital.
But fear is growing on Main Street as well as Wall Street about the likelihood of multiple bank failures and the strain that would put on the FDIC.
The fund, which is marking its 75th anniversary this year with a "Face Your Finances" campaign, is at $45.2 billion -- the lowest level since 2003. At the same time, the number of troubled banks is at a five-year high.
FDIC Chairman Sheila Bair has not ruled out the possibility of going to the Treasury for a short-term loan at some point. But she has said she does not expect the FDIC to take the more drastic action of using a separate $30 billion credit line with Treasury -- something that has never been done.
This week, the FDIC reported:
The Deposit Insurance Fund (DIF) balance decreased by 14 percent ($7.626 billion) to $45.217 billion during the second quarter of 2008. The second quarter 2008 decrease was primarily due to the $10 billion increase in the contingent liability for anticipated failures, the majority of this amount pertained to the projected loss for IndyMac Bank.
See the raw numbers here.
You can see where the money has gone recently in another part of the FDIC's statement:
Note that subsequent to June 30, the FDIC experienced three bank failures during the month of July -- IndyMac Bank, First National Bank of Nevada, and First Heritage Bank, with total assets of $32 billion, $3.9 billion, and $161 million, respectively. In July, the DIF disbursed $14.5 billion to fund these failures -- $11.5 billion to pay insured depositors and $3 billion to fund the operations of the IndyMac Federal Bank conservatorship. The initial loss estimate for these failures are: $8.9 billion for IndyMac Bank, $820 million for First National Bank of Nevada, and $42 million for First Heritage Bank.
Look up information about individual banks here.
