The FDIC released its second quarter report on the banking industry. Here are some interesting numbers from the press release:
- Deposit Insurance Fund (DIF) balance declined from $13.0 billion to $10.4 billion
- Number of banks on problem list increased from 305 to 416
- Total assets of problem banks increased from $220.0 billion to $299.8 billion
- FDIC insured banks reported an aggregate net loss of $3.7 billion
The press release focused more on the DIF’s reserves than its balance, “Combined, the total reserves of the DIF equaled $42.4 billion at the end of the quarter.” There were several quotes by Chairman Bair in which she tried to ease concerns:
Chairman Bair went on to say, “The FDIC was created specifically for times such as these. No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the last 75 years. No insured depositor has ever lost a penny of insured deposits…and no one ever will.”
…
Chairman Bair distinguished the DIF’s reserves from the FDIC’s cash resources, which included $22 billion of cash and U.S. Treasury securities held as of June 30, as well as the ability to borrow up to $500 billion from the Treasury. “A decline in the fund balance does not diminish our ability to protect insured depositors,” Chairman Bair concluded.
More details of the report can be found in this NY Times article.
As a bank depositor who keeps under the FDIC limit, I’m not concerned about the safety of my deposits. As we saw last year during the peak of the financial crisis, the federal government will do what ever it takes to ensure financial stability. Not covering insured deposits would be a major blow to financial stability, and I don’t believe the government will let that happen. Of course there are the issues of the growing national debt and the weakening dollar, but these are different issues than the safety of the deposits.
In addition to the quarterly report, the FDIC updated its database with the banks’ financial data for the end of the second quarter. Ratings services like BauerFinancial and Bankrate.com use this data for their star ratings. Recent ratings had been based on 3/31/09 data. Their new ratings based on 6/30/09 data should be out soon. BauerFinancial has typically been the first to include the new data.
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