Banks Bailing Out FDIC
The Federal Deposit Insurance Corp. is weighing several costly – and never-before-used – options as it struggles to shore up the dwindling fund that insures bank deposits. The agency is considering borrowing billions from healthy banks. Alternatively, it may impose a special fee on the banking industry. A third option – borrowing from the Treasury – is politically unpalatable, since it would resemble another bailout. A fourth option would be to have banks pay their regular insurance premiums early. But that wouldn’t solve the fund’s long-term cash needs. The FDIC is expected to propose a solution at a board meeting next week. Bank failures since the financial crisis struck have drained the fund, which insures bank deposit accounts of up to $250,000, to its lowest level since 1992.