Thursday, May 20, 2010

FDIC Deposit Insurance (Under)Fund

The FDIC's quarterly banking profile has been released disclosing that the deposit "insurance" agency has negative $20.7 billion to satisfy any upcoming bank runs and liquidations. Of course, there's no way to calculate the real claims that may be made on the DIF because the loss sharing agreements between the FDIC and acquirers of failed institutions defer loss recognition:

“Problem List” Continues to Grow

The number of institutions reporting quarterly financial results declined by 80 in the first quarter, from 8,012 to 7,932. Forty-one FDIC-insured institutions failed during the quarter, while 37 institutions were merged into other charters. Only three new charters were added during the quarter, and all three were charters formed to acquire failed banks. The number of insured commercial banks and savings institutions on the FDIC’s “Problem List” increased from 702 to 775 during the quarter, and total assets of “problem” institutions increased from $403 billion to $431 billion.

Don't expect to see a dramatic increase in the rate of bank closures. The FDIC can't afford it.