FDIC Looking at Ways to Survive
September 28, 2009 by Stephen Kersey
Filed under Business
The Federal Deposit Insurance Corp. has fallen on difficult times following the failure of 95 banks in 2009. As things in the financial industry still remain uneasy, practically every expert believes it’s a question of when — not if — the FDIC will run out of money.
How will the FDIC get money to survive these difficult times? According to the Associated Press, the leading idea at the moment calls for the FDIC to require banks to prepay premiums. One rumored plan has the FDIC asking for three years of prepaid premiums.
Currently, the FDIC has said that they generate about $12 billion per year in premiums. If they do end up asking for three years, that will be $36 billion in prepaid premiums that can help make sure that the FDIC doesn’t run out of money for the time being.
While the FDIC could tap federal money, many analysts believe that is one of the last options. The prepaid route is reportedly much preferred.
It’ll be interesting to see how banks react to the news. Banks that are already struggling probably won’t love the idea of being required to prepay premiums for three years.
FDIC Guide (Image: Flickr)
