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US banks asked to save government guarantor from insolvency
Nov 12, 2009, 21:52 GMT
Washington - Running out of money after the year's devastating financial crisis, the government's guarantor of US bank deposits on Thursday asked that banks help to keep it afloat.
The Federal Deposit Insurance Corporation (FDIC), which serves as an insurer for savings accounts at nearly 8,200 banks across the United States, is calling on its members to pay three years worth of premiums upfront, which should raise about 45 billion dollars.
The FDIC is reporting a loss for the first time in its history as the financial crisis has forced banks across the country into bankruptcy, including 120 smaller and mid-size banks just this year. The FDIC listed another 400 banks in danger at the midpoint of 2009.
The decision to request more money was made at the FDIC's board meeting in Washington. Banks will see their premiums increase beginning in 2011.
The FDIC guarantees individual bank deposits of up to 250,000 dollars and collects annual fees from its member banks. It was established after the Great Depression of the 1930s to help avoid mass withdrawals of money from banks in crisis.
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