It’s not just the healthcare industry that’s compensating for costs by raising premiums. Check out the FDIC’s plan to finance the next wave of bank failures.

• The Federal Deposit Insurance Corp. exists to protect customer deposits at banks up to $250,000. But with so many banks failing in the past year, the FDIC has had to pay out more than they expected, and projections indicate their fund will be out of cash early in 2010 if action is not taken.
• To combat the drain without relying on government assistance or increasing the rate it charges to banks for customer deposit insurance, the agency’s board has decided to propose a kind of advance in premium payments from the banks it insures – to the tune of $45 billion, or three years’ premium payments.
• Banks have been mostly supportive of the plan, expressing relief that the rates – which have already been increased once this year – will not go up again.

Facts & Figures

• So far in 2009, 94 banks have failed.
• FDIC projections indicate a potential $100 billion increase in failed bank payments through 2013.
• Banks are already paying $17 billion into the fund this year, including the rate increase.

Best Quote

“It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem. In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.” – Sheila C. Bair, FDIC Chairwoman