FDIC Insurance Fund Still $20 Billion in the Hole

Greg Hunter
USAWatchdog.com

While the stock market was beginning its 376 point plunge yesterday, the Federal Deposit Insurance Corporation was quietly putting the best face it could on a banking system in serious trouble.  In a press release to update the status of the insurance fund, the big positive headline was, “FDIC-Insured Institutions Earned $18 Billion in the First Quarter of 2010–Net Income Highest in Two Years.” FDIC Chairman Sheila C. Bair said, “There are encouraging signs in the first-quarter numbers . . . Industry earnings are up. More banks reported higher earnings, and fewer lost money.” (Click here for the complete FDIC press release.)
I can appreciate Chairman Bair’s positive attitude, but “encouraging signs” do not mean we have turned the corner and brighter days are ahead.  The Deposit Insurance Fund, or DIF, has a negative balance of -$20.7 billion.  That is just a $200 million improvement from the all time record deficit of -$20.9 billion at the end of 2009.  I don’t see how these numbers are “encouraging.”
I talked with FDIC spokesman David Barr yesterday about the shortfall in the DIF.  He said, “The FDIC is not broke.” It has an additional “$63 billion in cash.” He told me there is about $46 billion in three years of prepaid deposit insurance premiums and an additional $17 billion in cash for a grand total of $63 billion in “liquid resources” to close insolvent banks.  Let me get this straight–nearly 75% of the FDIC’s bailout money is from fees collected up front.  What happens when the FDIC burns through that?  Will they collect another 3 years of fees?


http://www.infowars.com/fdic-insurance-fund-still-20-billion-in-the-hole/