insurance fdic
Due to the rapidly growing number of bank failures, the FDIC (Federal Deposit Insurance Corporation) is basically a lack of money. People look specifically for banking institutions that are backed by the FDIC to ensure the safety of their deposits – But what happens if the FDIC out of money? Is there a risk even if your money is kept in a FDIC insured bank?
Previously, the FDIC had been informed that funds were being depleted, because the number of failed banks, and it is anticipated that future bank failures could cost the fund about $ 65 billion until 2013. In an effort to replenish the insurance fund, the FDIC said begin charging U.S. banks a flat fee of 20 cents per $ 100 insured and raising other fees. The regular rate in 2007 averaged 5.4 cents, and increased in April 2008 from 10 to 14 cents, and increased again up to 12 to 16 cents. Before 2007, over 90% of banks do not pay fees for deposit insurance (because it was not necessary). These additional costs are estimated to generate 27 billion U.S. dollars compared with the $ 3 billion raised fees in 2008, according to the Board of the FDIC, but still fall short of estimated demand for the funds according the number of bank failures.
"We are taking steps today to ensure that the deposit insurance system remains sound," President FDIC's Sheila Bair said during a board meeting at agency headquarters in Washington. "These steps are necessary because banks, not taxpayers, are expected to to finance the system. "
Since the beginning of 2008, have reported 58 bank failures. The Federal Deposit Insurance Corporation Fund used to reimburse customers of their deposits to as much as $ 250,000 today, every time the bank fails. Last year, Congress increased the amount of FDIC coverage $ 100,000 to $ 250,000 per depositor, which also contributes to depletion of funds. The fund was reduced from 34.6 billion U.S. dollars to $ 18.9 billion in the fourth quarter.
A bill introduced in Congress would provide a loan of 500 billion U.S. dollars of government to the FDIC, in order to ensure the fund has the money to continue backing up individual bank accounts of $ 250,000. The bill is labeled Depositor Protection Act of 2009 and is supported by the chairman of the Senate Banking Committee, Chris Dodd, D-Conn. , And Sen. Mike Crapo, R-Idaho.
Is your money safe? During the great depression in the first place, there was a bank run. People were struggling to get their money from savings accounts and banking institutions for fear that if / when the banks were under which they would lose all their money. This led to the founding of the Federal Deposit Insurance Corporation, to provide insurance for their money bankers would be safe, even if the failed bank. The loan of 500 billion U.S. dollars of government, combined with increased FDIC rates banks is gathering to help re-finance the system is intended to keep it safe and keep people from withdrawing their money from the banking system (and cause the Second Great Depression!)
About the Author:
Debra Dragon is a freelance writer for
DepositAccounts.com
. She writes about how to make your money work better for you through various deposit accounts, including savings accounts,
interest checking accounts
, IRAs, and money market funds.
Article Source: ArticlesBase.com – The FDIC is Running Out of Money – is Your Money Safe?
FDIC Deposit Insurance Coverage – Certain Retirement Accounts
