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The FDIC may ask banks to finance a plan to rebuild the insurance fund that protects your deposits

Posted by: RateAPY Bank Rates News
October 6th, 2009

Banks will have to prepay $45 billion in premiums at the end of this year to shore up the insurance fund that protects your bank deposits, under a Federal Deposit Insurance Corp. proposal announced Tuesday. By law, the FDIC must rebuild the fund when the reserve ratio–the balance divided by insured deposits–falls below 1.5%. Due to the large number of bank collapses the fund is now in the red. Rather than tapping the Treasury, the FDIC is looking to the baning industry for financing. Under the proposal, banks would prepay three years of premiums, based on deposits and lending risk, at the end of 2009. FDIC officials stressed that the fund’s troubles would not impact insurance on deposits, so money you’ve invested in FDIC-insured institutions is safe. As you invest in CD, savings, and money market accounts, keep in mind the FDIC insures deposits of up to $250,000 per person at each institution.