FDIC Gets Ready for Bank Failures
August 25th, 2008Via: Statesman:
Hundreds could fail, some industry experts predict. That could force the agency to make good on its promise to insure most customers’ checking and savings deposits up to $100,000 and some retirement accounts up to $250,000, putting pressure on its insurance fund.
Is the agency, whose combined insurance funds were technically pushed into insolvency during the savings and loan debacle two decades ago, ready for another banking crisis? And how bad could it get?
Despite the frequent gloom on both Wall Street and Main Street, industry players seem confident in the overall resiliency of the banking industry and the FDIC’s ability to shelter customers from bank failures.
The FDIC, which had shrunk to 4,600 employees from 23,000 at the height of the savings and loan meltdown, has been gearing up for another wave of bank failures.
It’s hiring 70 new employees and bringing back 70 retirees to beef up its teams that swoop in, usually over a weekend, to take over and reopen banks under new management.
The FDIC’s Atlanta regional office, which covers seven states from West Virginia to Florida, also recently boosted its bank examiner and professional staff by about 10 percent, to about 300. The agency is also expected to soon raise the insurance premiums it charges banks and thrifts to begin rebuilding its reserves.
