FDIC considers new source of cash

Tamara Keith Sep 22, 2009
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FDIC considers new source of cash

Tamara Keith Sep 22, 2009
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Steve Chiotakis: We’ve heard the Federal Deposit Insurance Corporation is running short on cash. Think of the number of failing banks it’s had to rescue in the last year. Now, the FDIC may ask healthy banks for a little something of its own. From Washington, here’s Marketplace’s Tamara Keith.


Tamara Keith: When a bank fails, the FDIC steps in — as it’s done 94 times this year already. The insurance fund protects everyone’s deposits and prevents bank runs. It gets its money from fees paid by banks. And worst case, the FDIC could always go to the Treasury for money.

But the New York Times is reporting FDIC officials are considering another option: asking healthy banks for loans. The banks would get bonds in exchange for the cash, so these loans would show up on their books as an asset.

The banking industry reportedly likes this plan, because weaker banks were already feeling overburdened by FDIC fees, and a bailout from Treasury would just lead to more political backlash. FDIC officials tell the Times they’ll have a plan for replenishing the fund next week.

In Washington, I’m Tamara Keith for Marketplace.

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