Individual bank and money market accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. Since the number of bank failures is increasing exponentially, who will be paying for these losses? 

From November 30th, 2009 

FDIC Insurance Fund Running A Deficit

For the first time since the early 1990’s, the Federal Deposit Insurance Corporation’s insurance fund to protect consumers’ deposits has a negative balance. The fund had a balance of $8.2 billion in the red for the third quarter, which was an $18.6 billion decline from the end of June. 

But don’t worry because there is a “contingency” fund of $21 billion dollars. This fund was $30.7 billion dollars at the beginning of December, 2009. At that rate, this fund would be depleted by April. Fortunately for the taxpayer, who will be insuring their own money through hyperinflation and tax increases passed on from the banks, this fund only lost $3 billion in January instead of $9 billion lost in December. 

What is the plan to cover the $100 billion in expected bank losses to depositers in the next five years? Well the government is making banks prepay $45 billion dollars early for their next three years’ premiums. So where is the other $40 – $50 billion coming from? One solution is to tax Wall Street banks more heavily. But as we have seen in the past, the taxpayer will be paying the shortfall.  

So how is the FDIC currently funded and what are their projections? 

 Banks are charged periodic fees — totaling $15 billion a year– to fill the deposit-insurance fund, which are used to pay depositors of failed institutions. But to fill a depleted fund, banks have recently been charged special assessments. 

The fund swung to an $8.2 billion loss in the third quarter of 2009, the largest drop since the savings-and-loan crisis of the 1990s. As a result of the loss, the agency was forced to dip into its contingency fund, which has dropped to $30.7 billion from $38.9 billion. 

The agency is also collecting three years of assessments on banks in advance at the end of 2009, along with banks’ fourth-quarter assessments, which should bring in roughly $45 billion of capital to help dismantle failed institutions. 

The FDIC estimates that bank failures will cost the agency as much as $100 billion over the next five years, with the majority of the losses taking place in 2009 and 2010. The agency may require banks to pay additional assessments to cover losses to the fund if more banks fail than the agency expects 

Projections from financial experts put the number of bank failures in 2010 from 500 to 2000. Even 500 bank failures (which I consider to be a low estimate) will generate a FDIC deficit shortfall of well over $150 billion dollars this year alone. If you are going to buy bank stocks, buy the banks who are being given these sweetheart deals by the government such as First Citizens Bank & Trust in Raleigh.

Here is a listing for most of the January 2010 bank failures and their breakdown of the over $3 billion dollars it cost us:

First-Citizens Bank & Trust Company, Raleigh, North Carolina, Assumes All of the Deposits of First Regional Bank, Los Angeles, California

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $825.5 million. First-Citizens Bank & Trust Company’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. First Regional Bank is the 14th FDIC-insured institution to fail in the nation this year, and the first in California. The last FDIC-insured institution closed in the state was Imperial Capital Bank, La Jolla, on December 18, 2009. 

Columbia State Bank, Tacoma, Washington, Assumes All of the Deposits of American Marine Bank, Bainbridge Island, Washington 

  The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58.9 million. Columbia State Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. American Marine Bank is the 15th FDIC-insured institution to fail in the nation this year, and the third in Washington. The last FDIC-insured institution closed in the state was Evergreen Bank, Seattle, on January 22, 2010. 

SCBT, N.A., Orangeburg, South Carolina, Assumes All of the Deposits of Community Bank and Trust, Cornelia, Georgia

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $354.5 million. SCBT, N.A’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Community Bank and Trust is the 13th FDIC-insured institution to fail in the nation this year, and the second in Georgia. The last FDIC-insured institution closed in the state was First National Bank of Georgia, Carrollton, earlier today. 

United Valley Bank, Cavalier, North Dakota, Assumes All of the Deposits of Marshall Bank, National Association, Hallock, Minnesota  

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $4.1 million. United Valley Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Marshall Bank, National Association is the 12th FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution closed in the state was St. Stephen State Bank, St. Stephen, on January 15, 2010. 

 Premier American Bank, National Association, Miami Florida, Assumes All of the Deposits of Florida Community Bank, Immokalee, Florida  

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $352.6 million. Premier American Bank, N.A.’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Florida Community Bank is the 11th FDIC-insured institution to fail in the nation this year, and the second in Florida. The last FDIC-insured institution closed in the state was Premier American Bank, Miami, on January 22, 2010. 

Community & Southern Bank, Carrollton, Georgia, Assumes All of the Deposits of First National Bank of Georgia, Carrollton, Georgia

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $260.4 million. Community & Southern Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. First National Bank of Georgia is the tenth FDIC-insured institution to fail in the nation this year, and the first in Georgia. The last FDIC-insured institution closed in the state was Rockbridge Commercial Bank, Atlanta, on December 18, 2009. 

Umpqua Bank, Roseburg, Oregon, Assumes All of the Deposits of Evergreen Bank, Seattle, Washington

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $64.2 million. Umpqua Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Evergreen Bank is the eighth FDIC-insured institution to fail in the nation this year, and the second in Washington. The last FDIC-insured institution closed in the state was Horizon Bank, Bellingham, on January 8, 2010. 

Charter Bank, Albuquerque, New Mexico, Assumes All of the Deposits of Charter Bank, Santa Fe, New Mexico

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $201.9 million. Charter Bank’s (Albuquerque) acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Charter Bank (Santa Fe) is the seventh FDIC-insured institution to fail in the nation this year, and the first in New Mexico. The last FDIC-insured institution closed in the state was Zia New Mexico Bank, Tucumcari, on April 23, 1999. 

Sunflower Bank, National Association, Salina, Kansas, Assumes All of the Deposits of Bank of Leeton, Leeton, Missouri

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $8.1 million. Sunflower Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Bank of Leeton is the sixth FDIC-insured institution to fail in the nation this year, and the first in Missouri. The last FDIC-insured institution closed in the state was Gateway Bank of St. Louis, on November 6, 2009. 

Premier American Bank, Miami, Florida, National Association, Assumes All of the Deposits of Premier American Bank, Miami, Florida

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $85 million. Premier American Bank, N.A.’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Premier American Bank is the fifth FDIC-insured institution to fail in the nation this year, and the first in Florida. The last FDIC-insured institution closed in the state was Peoples First Community Bank, Panama City, on December 18, 2009. 

FDIC Creates a Deposit Insurance National Bank of Kaysville, Utah to Protect Insured Depositors of Barnes Banking Company, Kaysville, Utah
Zions First National Bank to Provide Temporary Operational Management

 The cost to the FDIC’s Deposit Insurance Fund is estimated to be $271.3 million. Barnes Banking Company is the fourth bank to fail this year and the first in Utah. The last FDIC-insured institution closed in the state was America West Bank, Layton, on May 1, 2009. 

First State Bank of St. Joseph, St. Joseph, Minnesota, Assumes All of the Deposits of St. Stephen State Bank, St. Stephen, Minnesota

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $7.2 million. First State Bank of St. Joseph’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. St. Stephen State Bank is the third FDIC-insured institution to fail in the nation this year, and the first in Minnesota. The last FDIC-insured institution closed in the state was Prosperan Bank, Oakdale, on November 6, 2009. 

First American Bank, Elk Grove Village, Illinois Assumes All of the Deposits of Town Community Bank and Trust, Antioch, Illinois

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.8 million. First American Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Town Community Bank and Trust is the second FDIC-insured institution to fail in the nation this year, and the first in Illinois. The last FDIC-insured institution closed in the state was Independent Bankers’ Bank, Springfield, on December 18, 2009. 

Washington Federal Savings and Loan Association, Seattle, Washington, Assumes All the Deposits of Horizon Bank, Bellingham, Washington

 The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $539.1 million. Washington Federal Savings and Loan Association’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. Horizon Bank is the first FDIC-insured institution to fail in the nation this year, and the first in Washington. The last FDIC-insured institution closed in the state was Venture Bank, Lacey, on September 11, 2009. 

Here is one example from December 2009:

New York Community Bank, Westbury, New York, Assumes All of the Deposits of AmTrust Bank, Cleveland, Ohio 

 As part of this transaction, the FDIC will acquire a cash participant instrument. This will serve as additional consideration for the transaction. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $2.0 billion.