February 27, 2009
FDIC back-up fund at 25-year low
Federal funds used to back up U.S. banks dropped to $19 billion at the end of 2008, the lowest amount since 1993, the Federal Deposit Insurance Corp. said.
The FDIC insurance fund hasn't been this low since the end of the savings and loan crisis, The New York Times said Friday.The FDIC will raise deposit insurance premiums this week to shore up the fund, FDIC Chairwoman Sheila Bair said.
While issuing a status report on the nation's banking industry, Bair said,
There is no question this is one of the most difficult periods we have encountered during the FDIC's 75 years of operation.
There are 252 firms on the regulator's cautionary watch list, compared to 76 on the list at the end of 2007, the Times reported.
In the first two months of the year, 14 banks have failed, compared with 25 in 2008. The year before that, in 2007, only three banks failed, the Times said.
In the fourth quarter of 2008, the country's banks lost $26.2 billion, the largest quarterly loss since the FDIC began tracking quarterly earnings.
Bair said that almost one-third of the nation's banks lost money in the quarter.