Les Jones

FDIC’s losses higher on failed banks now than in S&L era

Tuesday, August 18th, 2009 | Economics |

Wall Street Journal - Failed Banks Weighing on FDIC:

For the 102 banks that have collapsed in the past two years, the FDIC’s estimated cost averaged 34%. That is sharply higher than the 24% rate between 1989 and 1995, when 747 financial institutions were closed by regulators … At three of the five banks that failed Friday, increasing the total to 77 so far this year, the financial hit to the agency’s deposit-insurance fund is expected by the FDIC to be about 50% of their assets.

If a failed bank’s assets are $10 billion and the losses are 34% that’s 3.4 billion. Now that the FDIC has exhausted its deposit insurance fund all of those losses are paid for by us taxpayers.

Hat tip to CalculatedRisk.

Tags: fdic

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