I'm not concerned at all. You see, we have this very nifty device that makes troubles such as the government "running out" of money a thing of the past.

quote:

Originally posted by DanceFloorPoet http://finance.yahoo.com/news/FDIC-...069115.html?x=0 Does this concern anyone? Quote from the article: "The FDIC's fund has slipped to 0.22 percent of insured deposits, below a congressionally mandated minimum of 1.15 percent. The $10.4 billion in the fund at the end of June is down from $13 billion at the end of March, and $45.2 billion in the second quarter of 2008."

Not at all. First of all, the government and Federal Reserve have made sure the financial system didn't collapse. Second, the FDIC is backed by the full faith and credit of the United States government.

quote:

Does it bother you that congress only mandates that the FDIC hold funds totaling 1.15% of all of the funds that they insure?

If the FDIC had to maintain a reserve equal to the number of deposits, they'd have to have trillions of dollars. They have enough to cover the expected losses from failed banks. And if they don't, they have the credit of the US government to back them up.

quote:

Does it make you nervous that currently they are only able to pay out 0.22% of all funds insured (in the event of a bank failure(s))?

Why are you surprised the FDIC is low on funds? Many banks have failed which means they'v had to take them over and pay of depositors. Washington Mutual had a 10 day bank run. This is nothing new. During the saving and loan crisis, the FDIC ran out of funds, so Congress filled the void. Nothing would change here.

quote:

Originally posted by Communist If the FDIC had to maintain a reserve equal to the number of deposits, they'd have to have trillions of dollars. They have enough to cover the expected losses from failed banks. And if they don't, they have the credit of the US government to back them up.

I'm ok with maybe 20%....but 1 percent? C'mon man. What kind of insurance is that?

And if they can't sustain themselves without assistance why do they exist in the first place? Why not just put a sticker that says "this bank is insured by you the taxpayer " on the front window of every bank branch instead of the FDIC stamp we see now?

quote:

Originally posted by DanceFloorPoet I'm ok with maybe 20%....but 1 percent? C'mon man. What kind of insurance is that? And if they can't sustain themselves without assistance why do they exist in the first place? Why not just put a sticker that says "this bank is insured by you the taxpayer " on the front window of every bank branch instead of the FDIC stamp we see now?

We'r talking about 1% of all deposits which is a huge sum. No one expects more than 1% of all deposits to have to be replaced during an average recession. We'r having a not so average recession and they still manage to still have funds left, though not a lot, and of course they must plan for the event they run out of funds.

quote:

Originally posted by DanceFloorPoet I'm ok with maybe 20%....but 1 percent? C'mon man. What kind of insurance is that? And if they can't sustain themselves without assistance why do they exist in the first place? Why not just put a sticker that says "this bank is insured by you the taxpayer " on the front window of every bank branch instead of the FDIC stamp we see now?

where do you get 20% from? Are you an actuary? Do you make your money by assessing risk? Reserve requirements for private insurance companies are far lower than 20%. If it was that high insurance companies couldn't make money (interest on money market securities just isn't high enough to pay for operating costs). In reality, private insurance companies probably need to keep liquid capital reserves in the range of <2%. The rest goes into longer term investments (e.g., REIT securities, RE loans, and other illiquid securities).

quote:

Originally posted by DanceFloorPoet I'm ok with maybe 20%....but 1 percent? C'mon man. What kind of insurance is that? And if they can't sustain themselves without assistance why do they exist in the first place? Why not just put a sticker that says "this bank is insured by you the taxpayer " on the front window of every bank branch instead of the FDIC stamp we see now?

where do you get 20% from? Are you an actuary? Do you make your money by assessing risk? Reserve requirements for private insurance companies are far lower than 20%. If it was that high insurance companies couldn't make money (interest on money market securities just isn't high enough to pay for operating costs). In reality, private insurance companies probably need to keep liquid capital reserves in the range of <2%. The rest goes into longer term investments (e.g., REIT securities, RE loans, and other illiquid securities).

I think it is a big deal. They are telling banks to pay like 50 billion up front.