Sunday, October 11, 2009

FDIC In the RED - 98 Failures this year

Three bank failures on Friday brought the total number of FDIC-insured institutions that have failed this year to 98. The estimated cost to the FDIC’s insurance fund for Friday’s failures was $293.3 million.

On Tuesday, FDIC Chairwoman Sheila Bair acknowledged that the agency’s deposit fund would likely fall into the red within the week. Bair proposed a plan [2] to shore up the fund. Under the plan, banks would prepay their annual assessments owed to the FDIC. Payments that would normally stretch through 2012 would all be handed over this year. The plan would raise $45 billion. To avoid a hit on their earnings from the payments, banks would be allowed to record the prepayment as if they paid on the usual yearly schedule.

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