Up Scope! FDIC's DIF Slips (Not So) Quietly Beneath the Waves

For the first time since 1992, the Deposit Insurance Fund of the FDIC is showing a negative balance.  Luckily, Chairwoman Bair can borrow another $94 billion from the Treasury before it never runs out of money, ever hits the debt ceiling.  Hurry Shelia!

 

The Deposit Insurance Fund (DIF) decreased by $18.6 billion during the third quarter to a negative $8.2 billion (unaudited) primarily because of $21.7 billion in additional provisions for bank failures. Also, unrealized losses on available-for-sale securities, combined with operating expenses, reduced the fund by $1.1 billion. Accrued assessment income added $3.0 billion to the fund during the quarter, and interest earned, combined with realized gains from sale of securities and surcharges from the Temporary Liquidity Guarantee Program, added $1.2 billion.

[...]

The DIF’s reserve ratio was negative 0.16 percent on September 30, 2009, down from 0.22 percent on June 30, 2009, and 0.76 percent one year ago. The September 30, 2009, reserve ratio is the lowest reserve ratio for a combined bank and thrift insurance fund since June 30, 1992, when the ratio was negative 0.20 percent.

Ouch.

More alarmingly, the massive spike in deposits ($491 billion in a single quarter) and total assets at problem institutions popped up $200 billionish in nine short months- exactly while the reserve ratio drops like a Cardiff girl's petticoat after 2am.  (Guess the videos had the intended effect).

 

 

Read the whole thing.