FDIC Bad News Means What to Savings Investors
Posted on August 26th, 2009
News reports that the FDIC has endured a 20 percent drop in its insurance fund may cause concern among savings investors.
Some analysts are predicting that the FDIC will be in the red by the end of the year. What does that mean for savings investors?
Not a Whole Lot, In Terms of Individual Accounts
The first part of the answer to that question might be best summed up as: not a whole lot, you’re safe.
The FDIC is so crucial to confidence in the banking industry that there is no scenario under which the U.S. government would allow FDIC insurance to “run out” in a way that cost individual depositors their savings.
Insurance up to $250,000 per depositor per account–that’s the FDIC promise and they’re sticking to it.
FDIC Options If It Needs Money
The FDIC has two basic options if more banks fail and the FDIC therefore needs more money to cover depositors:
1. Borrow money from the U.S. Treasury.
2. Charge banks more fees to pay for FDIC insurance.
While it’s certainly nice to have two options rather than no options, savings investors would rather not see either of these options exercised.
The borrowing option could be inflationary, and the more fees for banks option may lead to more fees being passed on to bank customers.
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- Top 5 Myths about FDIC Insurance
- FDIC’s Second Quarter Report – Number of Problem Banks Increase to 416
- EverBank Offers New Savings Account Customers 2.25% APY
- Banks to Rescue FDIC
Tags: Investors, Savings Investors
Filed under Bank Rates |