Comments on: FDIC Low on Funds http://www.ritholtz.com/blog/2009/08/fdic-low-on-funds/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 15:55:22 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Black List Grows for Troubled Banks | ZachStocks http://www.ritholtz.com/blog/2009/08/fdic-low-on-funds/comment-page-1/#comment-209909 Black List Grows for Troubled Banks | ZachStocks Fri, 28 Aug 2009 20:20:20 +0000 http://www.ritholtz.com/blog/?p=36850#comment-209909 [...] Other Articles of Interest SuperNanke to the Rescue Consumer Stocks to Struggle, Debt to Blame Ritholtz: FDIC Low on Funds FT: US ‘Problem’ Bank List Hits 15 Year [...] [...] Other Articles of Interest SuperNanke to the Rescue Consumer Stocks to Struggle, Debt to Blame Ritholtz: FDIC Low on Funds FT: US ‘Problem’ Bank List Hits 15 Year [...]

]]> By: Blissex http://www.ritholtz.com/blog/2009/08/fdic-low-on-funds/comment-page-1/#comment-209551 Blissex Thu, 27 Aug 2009 20:34:37 +0000 http://www.ritholtz.com/blog/?p=36850#comment-209551 as usual these news are completely wrong or at least misleading. The FDIC's funds are the entire capital of the banking industry; the so called "fund" is just an account into which it put advance payments. The FDIC can charge all member banks any amount needed to pay out depositor money at a failed member institution. The FDIC only runs a scheme, it does have no capital and is not an insurer; deposit insurance in the USA is a pay-as-you go self-insurance system, where all money paid to depositors is owed by all other banks, not by the FDIC. The FDIC may borrow money from the Treasury only to spread out the payments from non-failed member banks to depositors of failed member banks. <b>http://www.fdic.gov/news/news/press/2008/pr08084.html</b> «As per our authorizing statute, any money we might borrow from the Treasury must be paid back from industry assessments.» «The fund is 100 percent industry-backed. Our ability to raise premiums essentially means that the capital of the entire banking industry - that's $1.3 trillion - is available for support.» «The FDIC receives no federal tax dollars - insured financial institutions fund its operations.» as usual these news are completely wrong or at least misleading. The FDIC’s funds are the entire capital of the banking industry; the so called “fund” is just an account into which it put advance payments. The FDIC can charge all member banks any amount needed to pay out depositor money at a failed member institution.

The FDIC only runs a scheme, it does have no capital and is not an insurer; deposit insurance in the USA is a pay-as-you go self-insurance system, where all money paid to depositors is owed by all other banks, not by the FDIC.

The FDIC may borrow money from the Treasury only to spread out the payments from non-failed member banks to depositors of failed member banks.

http://www.fdic.gov/news/news/press/2008/pr08084.html
«As per our authorizing statute, any money we might borrow from the Treasury must be paid back from industry assessments.»
«The fund is 100 percent industry-backed. Our ability to raise premiums essentially means that the capital of the entire banking industry – that’s $1.3 trillion – is available for support.»
«The FDIC receives no federal tax dollars – insured financial institutions fund its operations.»

]]> By: leftback http://www.ritholtz.com/blog/2009/08/fdic-low-on-funds/comment-page-1/#comment-209528 leftback Thu, 27 Aug 2009 20:01:29 +0000 http://www.ritholtz.com/blog/?p=36850#comment-209528 Ain't really a big surprise, is it, this one...? Ain’t really a big surprise, is it, this one…?

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