FDIC Deposit Insurance Fund Goes Negative
For the first time since 1992, the FDIC's Deposit Insurance Fund is showing a negative balance:
![](http://www.ensoadvisors.com/blog/blog/uploaded_images/downdown-712459.png)
The DIF decreased by $18.6 billion during the third quarter to a negative $8.2 billion (unaudited) primarily because of $21.7 billion in additional provisions for bank failures. Also, unrealized losses on available-for-sale securities, combined with operating expenses, reduced the fund by $1.1 billion. Accrued assessment income added $3.0 billion to the fund during the quarter, and interest earned, combined with realized gains from sale of securities and surcharges from the Temporary Liquidity Guarantee Program, added $1.2 billion.
The DIF’s reserve ratio was negative 0.16% on September 30, 2009, down from 0.22% on June 30, 2009, and 0.76% one year ago. The September 30, 2009, reserve ratio is the lowest reserve ratio for a combined bank and thrift insurance fund since June 30, 1992, when the ratio was negative 0.20%.
More alarmingly, the massive spike in deposits ($491 billion in a single quarter) and total assets at problem institutions popped up $200 billionish in nine short months- exactly while the reserve ratio drops:
![](http://www.ensoadvisors.com/blog/blog/uploaded_images/downdown-712459.png)
The DIF decreased by $18.6 billion during the third quarter to a negative $8.2 billion (unaudited) primarily because of $21.7 billion in additional provisions for bank failures. Also, unrealized losses on available-for-sale securities, combined with operating expenses, reduced the fund by $1.1 billion. Accrued assessment income added $3.0 billion to the fund during the quarter, and interest earned, combined with realized gains from sale of securities and surcharges from the Temporary Liquidity Guarantee Program, added $1.2 billion.
The DIF’s reserve ratio was negative 0.16% on September 30, 2009, down from 0.22% on June 30, 2009, and 0.76% one year ago. The September 30, 2009, reserve ratio is the lowest reserve ratio for a combined bank and thrift insurance fund since June 30, 1992, when the ratio was negative 0.20%.
More alarmingly, the massive spike in deposits ($491 billion in a single quarter) and total assets at problem institutions popped up $200 billionish in nine short months- exactly while the reserve ratio drops:
![](http://www.ensoadvisors.com/blog/blog/uploaded_images/ratio-715935.png)