On September 29, 2009
New FDIC Proposal Aids Banks In Declaring Brighter Balance-Sheets
On the surface, it seems quite sensible that banks ought to prepay Federal Deposit Insurance Corporation (FDIC) premiums through 2012 in order to give the regulator some much-needed cash. A total 95 bank failures this year has left FDIC-coffers dry, to the tune of around $42 billion, according to reports. The pre-payment of premiums would give it another $45 billion in cash, helping it to soften the projected $100 billion blow created by further banking failures through 2013, according to officials. But as observers have pointed out before, the FDIC doesn’t actually need to collect a pre-payment of premiums to do its job. That’s because it already has a credit line of $500 billion, or roughly five times the amount…
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