FDIC Losses Decline
The FDIC’s fund for insuring banks will have to pay out $19 billion because of bank losses over the next five years, a decline from the original estimate of $23 billion, the agency said last week.
“The assessment that the insurance fund remains on the path to recovery and on track to meet the goals established by Congress is welcome news,” FDIC Acting Chairman Martin J. Gruenberg said in a statement. “As we seek to stay on track, it's important to always be mindful of the challenges we face and ongoing risks to the insurance fund.”
On June 30 the fund had a positive balance after being in the red for seven consecutive quarters.
The agency projects that its assessment rates will result in the fund increasing to 1.15 percent of insured deposits in 2018. It has to increase the ratio to 1.35% by 2010, as a result of a provision of last year’s financial overhaul bill.
So far this year, 76 FDIC-insured banks have failed, compared with 129 at the same time last year.
According to the American Bankers Association, banks are paying $13.5 billion in yearly premiums to the FDIC and the agency’s insurance fund is rebuilding faster than the FDIC had projected at the end of 2009 when the industry paid $46 billion in prepaid assessments.
The NCUA didn’t levy an additional assessment to shore up the NCUSIF this year because credit union failures have declined. There have been 13 natural person credit union failures through the end of August, and they have cost the fund $46.8 million.