FDIC to Seek Premium Prepayments

As a quick followup to last week’s article on FDIC solvency, I just wanted to point out that the FDIC has opted to accelerate bank premiums to help build up their cash on hand from the current $10B level.

Under the just-announced plan, the FDIC will require banks to prepay their 2010-2012 assessments when they pay their Q4 2009 premiums. There will also be a three basis point (0.03%) increase in premiums starting in 2011.

From what I’ve heard, the increased cushion will amount to roughly $10B per year of accelerated premiums, or $30B total. Of course, this also means that the FDIC won’t be collecting any money from 2010-2012 unless they change the rules.

Thoughts?

Source: WSJ.com

4 Responses to “FDIC to Seek Premium Prepayments”

  1. Anonymous

    The unique thing about the FDIC and really the government as a whole for that matter is that as much as we can speculate about this or about that the FDIC has one unique advantage over any other type of non governmental entity in that if their projections are off then they have the luxury of simply tapping all of us for more money in the form of increased taxes or decreased purchasing power because of their inflation producing money printing obsession.

  2. Anonymous

    My $.02 : I think the whole thing will blow over within 1-2 years. They already propped up almost all the major banks with the bailout. Those banks won’t fail. More smaller banks will fail but nothing too massive and the actual losses to the FDIC won’t be that big. A $30B increase in the reserve should be enough to last them through.

  3. Anonymous

    My thought is… they will just change the rules when 2010 – 2012 roll around and come up with the money some other way at that time. If we look to the past for guidance… that will most likely mean printing more money out of thin air or raising taxes on individuals and small businesses.

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