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As a follow up to Friday's newsletter, the FDIC closed four more banks on April 24.  Visit the FDIC website for more details.

 

 

The cost of these four closings is estimated as follows:  California ($394 Million),  Idaho ($191.2 million), Michigan ($71.3 million) and Georgia ($41.9 million ).  The FDIC has now closed 29 banks in the U.S. this year.  

 

Curiously, the FDIC, which insures deposits up to $250,000, has tried but failed to convince Ccongress to allow it to charge banks an "insurance premium" in case of a crisis. However, the great cost conscious thinkers in Congress believed there was no need as the FDIC had been well-capitalized at the time.  Furthermore, Congress, in its imminent wisdom, also believed that bank failures were so infrequent there was no need to collect the premiums and increase FDIC reserve capital.

 

As of Dec. 31, the FDIC had $18.9 billion in its insurance fund, which is a far cry from the $52.4 billion it had a year earlier.  The agency has projected it will need $65 billion to take over failed banks through 2013.  As a result, the FDIC is asking Congress for $500 Billion to add to its greatly depleted reserve.