FDIC Struggles With Failed Banks

So far in 2009, 77 banks have failed, testaments to the withering strength of the recession and the severe impact of the financial crisis. However, the Federal Deposit Insurance Corporation has also found itself struggling to make ends meet, finding it difficult to accomplish its goal of reimbursing those depositors with money in failed banks.

On average, the FDIC has had to pay 34 percent of each failed bank’s assets in order to make reparations to depositors of the banks. The Community Bank of Nevada required the highest percentage of payment, with $1.52 billion in assets and a cost of $781.5 million, while the failed Colonial Bank will cost 11 percent of the bank’s assets, or $2.8 billion.

This has left the FDIC’s insurance fund with only $13 billion at a time when the corporation has about 300 banks and other troubled financial institutions on its watch list. Many of these are banks that decided to undergo many risky investments on the wave of a strong economy, only to see their risks hardly pan out and their capital dissipate with the onset of the recession.

FDIC (Image: Flickr)