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FDIC needs to find way out of hole

The FDIC emblem.

TEXT OF STORY

Bill Radke: The Federal Deposit Insurance Corporation -- the FDIC -- is short on cash. Now the Treasury is standing behind it, so your bank account is safe. But as Marketplace's Steve Henn reports, the FDIC needs to find a way out of its hole, and the board is meeting today.


Steve Henn: It's cost the FDIC $14 billion to shut down 50 banks in the last three months.

Bert Ely is a banking consultant:

Bert Ely: This situation is turning out to be much more expensive in terms of disposing of failed banks than I think anybody had anticipated.

Lately the FDIC jacked bank premiums to cover its losses. Bill Black, a former bank examiner, says that weakens banks:

Bill Black: Banks that are well run end up paying eventually a very heavy price.

Some suggest the FDIC borrow money from healthy banks. Black says it's time for the U.S. Treasury to bail out an FDIC that's flat broke.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.
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Does anyone know the lo-fi song with the analog sounding synth that played right after this story 3:19 in the podcast I think. It sounds really cool and I would like the album

Of course the banks are going to complain about this being demanded from them, but they have to like it more than just being assessed special assessment after special assessment. When you think about it on a smaller scale they do have the right to complain. After all, I’m sure none of us would like if the utility company all of a sudden asked us to prepay for 3 years worth of electricity. However, the FDIC faces a secured future. Banks and the FDIC need to work together to function properly and I really have no problem with this course of action. Faced with a difficult situation, its really the best course of action.

Check out my blog on the FDIC's current situation at.... http://www.thedebtgazette.com/2009/09/fdic-bailout-from-banks/

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