Where does FDIC insurance money come from?

It is called the Deposit Insurance Fund. It is about 1% (actual cash on hand) of what could actually be paid out.

Fees paid by member banks and backed by the US taxpayer

SRM

So if alot of banks fail and FDIC claims are high, is the money there to pay everyone or is it another bill for the taxpayers?

Here’s how the FDIC works. It’s insurance, and there are reserves that are required be kept. It is backed in part by the government, but only up to a point. The rest is insurance.

The taxpayer is on the hook. The FDIC is way under funded, and will not be able to handle the banks that fold in the next 12 months. Watch them do a bank holiday, where deposits are forbidden except in small amounts. I’d say in the next 12 months we wil see it.

If they had to pay out everything tomorrow it would be about five trillion. I’m running from memory there. Could be more, could be less.

This is obviously not doable.

It is a good idea, it is just the implementation of it is shitty.

This just in http://biz.yahoo.com/ap/081212/bank_failures.html?.v=4

more http://globaleconomicanalysis.blogspot.com/2008/11/grim-fdic-quarterly-banking-profile.html

Maybe we can swin across the Rio Grande to Mexico and get jobs building Ford and GM cars for 65 cents a day when the unemployment runs out….

HA… The thought of people living in Texas going to Mexico for work brings a smile to my face.

There are PLENTY of banks that are not in trouble that have money to lend. Just like there are plenty of homes that are not in foreclosure, and plenty of people who live within their means.

Alfreda—which ones?

Look at community banks in your area. Most have adhered to more traditional lending models, and will be less likely to let you get into trouble.

Community banks are over extended with commercial loans. Commercial real estate is set to implode in the next 4–8 months. I’d like to know of one well capitalized bank that is lending, surely if there are PLENTY it will be easy to name one

Several of my local banks have actually hung banners on the fronts of their buildings touting their solvency and ability/willingness to loan.

OK, Banners. I can take that to the bank. “Their banner said they were solvent”. Did WAMU say that? Lehman? Wachovia? Citi? Bear? Countrywide? New Century? Chase? GMAC? (Psst, they all said they were solvent too)

But hey, If they’ve got a banner up, they must be good as gold.

So which bank is hanging out banners?

The only one I can name for you is the TFR Credit Union. Does that count as a bank? Not being snarky, I’m really not sure.

A lot of what I’d call unfounded panic going on here. Essentially, as long as you stay within the $250k limit on your deposits (was $100k up until recently), if your money goes in, you will get it back. Chances are you’ll get MOST of your money back over and above that amount if the bank fails. But basically, not only would you have to have a systematic failure of just about every single bank in the United States, you’d also have to have our government collapse to the point where it would not honor those deposits. If you’ve got less than $250k to put in the bank, the worst thing that’s going to happen is you’ll have to wait a bit to get your money. And realize, the banks that are failing now are “investment” banks. There is no doubt more banks will fail, possibly hundreds of them, but they’re not ALL going to fail, and we’re not going to see so many of them fail that the FDIC isn’t going to be able to pay on their obligations. Remember, our government can still just pull $700 billion out of its ass whenever it wants. Deposit your money wherever works best for you and don’t worry about it.

@dale—here is a list of non-investment banks that have failed, let me repeat, the below list is of NON INVESTMENT BANKS SINCE 2006.
311. BankUnited – Wholesale
310. Solstice Capital Group – HSBC
309. MortgageIT
308. HCL Finance Inc. – Wholesale
307. LIME Financial Svcs. – Wholesale
306. Mortgage Network Inc. – Wholesale
305. Fortes Financial – Wholesale
304. HSBC Mortgage Corp. – Wholesale
303. CBRE Realty Finance
302. Franklin Bank, SSB
301. Mortgage Lion, Inc. – Wholesale
300. HMS Capital, Inc.
299. American Sterling Bank – Wholesale
298. CTX Mortgage Co. – Retail
297. Equity One Commercial
296. Coldstream Financial Svcs.
295. Banco Popular North America – Wholesale
294. Ace Mortgage Funding, LLC
293. E-Loan
292. Gateway Bank, F.S.B. – Wholesale
291. First Call Mortgage Co.
290. Downey Savings and Loan – Wholesale
289. Prospect’s Metrocities Mortgage – Wholesale
288. ComCor Mortgage – Wholesale
287. Chevy Chase Bank – Wholesale
286. Washington Mutual – Retail and Warehouse
285. Hometown Commercial Capital
284. Mid Atlantic Capital LLC
283. Kemper Mortgage, Inc.
282. Liberty Mortgage Funding Co.
281. Freddie Mac
280. Fannie Mae
279. Pacific Community Mortgage, Inc. – Gold Reverse, Inc.
278. Homecomings Financial, LLC
277. Thornburg Mortgage
276. CSB Mortgage
275. Carteret Mortgage Corporation
274. Accredited Home Lenders, Lone Star Funds – Wholesale
273. Western Residential Mortgage
272. Liberty Home Lending
271. Equipoint Financial Network, Inc.
270. Ideal Mortgage Bankers, Ltd. – Wholesale
269. Silver State Bank – Wholesale
268. Irwin Union Bank & Trust Co. – Wholesale
267. SunTrust Bank Equity Wholesale
266. Wachovia Mortgage, FSB – Wholesale
265. Lehman Brothers SBF
264. IndyMac Bancorp
263. Mortgages Ltd.
262. Wilmington Finance – Wholesale
261. Accredited Home Lenders, Home Funds Direct
260. Assured Lending Corp. – Wholesale
259. Homewide Lending Corporation
258. Vanguard Mortgage & Title, Inc.
257. Chase Home Equity – Wholesale
256. Chase Subprime – Wholesale
255. Evergreen Investment & Carnation Banc
254. Casa Blanca Mortgage/Shearson – Wholesale
253. Guaranty Bank – Correspondent
252. Citi Residential Lending
251. Montgomery Mortgage Capital Company
250. E*Trade Wholesale Lending
249. Shearson Financial Network, Inc.
248. American Bank Mortgage Group – Wholesale
247. AmeriBanc Corp.
246. Washington Mutual – Wholesale
245. Century Bank, F.S.B. – Wholesale
244. Diversified Mortgage, Inc.
243. National Wholesale Funding
242. Centennial Mortgage and Funding, Inc./Award Mortgage
241. Fidelity Home Mortgage Corp.
240. LMI Funding, Inc.
239. Millennium Mortgage – Wholesale
238. Origen Financial, Inc. (Correspondent)
237. CitiMortgage – Home Equity Wholesale
236. Bear Stearns Residential Mortgage
235. East West Mortgage Co. of VA
234. New Vision Residential Lending
233. Washington Savings Bank, F.S.B. – Wholesale
232. Macquarie Mortgages USA Inc.
231. Global Mortgage, Inc.
230. Unique Mortgage Solutions (UMS, LLC)
229. First Franklin – Merrill Lynch
228. First National Mortgage Sources
227. Resource Mortgage (Wholesale)
226. KH Financial
225. Lydian Mortgage
224. OMG Wholesale Lending
223. Saxon Mortgage (Wholesale)
222. Beazer Mortgage Corp.
221. Allpointe Mortgage (Broker Program)
220. Popular Warehouse Lending
219. Allied Lending Corp. (Wholesale)
218. BF Saul Wholesale Lending
217. Community Resource Mortgage
216. Lehman/Aurora Loan Services
215. Residential Mortgage Capital
214. Maverick Residential Mortgage
213. Countrywide Financial Corp.
212. First NLC Financial Services
211. First American Bank (Wholesale)
210. Soma Financial
209. National City Corp. (Wholesale)
208. Heartland Wholesale Funding
207. Homefront Mortgage Inc.
206. PNC Bank H.E.
205. Family First Mortgage Corp.
204. First Fidelity Financial
203. BSM Financial
202. 1st Choice Mortgage
201. Wescom Credit Union
200. Coast Financial Holdings/Coast Bank
199. WaMu (Subprime)
198. First Madison Mortgage
197. Southern Star Mortgage
196. TransLand Financial
195. Secured Bankers Mortgage Company (SBMC)
194. ComUnity Lending
193. Delta Financial Corp
192. BayRock Mortgage
191. Empire Bancorp
190. Option One – H&R Block
189. Citigroup – FCS Warehouse
188. Charter One (Wholesale)
187. Wells Fargo – Home Equity
186. Paul Financial, LLC
185. Webster Bank (Wholesale)
184. Fieldstone Mortgage Company
183. Tribeca Lending Corp. (Wholesale)
182. WAMU Comm. Correspondent
181. Marlin Mortgage Company
180. Countrywide Specialty Lending
179. UBS Home Finance
178. MortgageIT-DB (Retail)
177. Edgewater Lending Group
176. ResMAE Mortgage Corp.
175. Citimortgage Correspondent (2nds)
174. AMC Lending
173. Liberty American Mortgage
172. Exchange Financial (Wholesale)
171. FirstBank Mortgage
170. Bank of America (Wholesale)
169. Diablo Funding Group Inc.
168. Honor State Bank
167. Spectrum Financial Group
166. Priority Funding Mortgage Bankers
165. BrooksAmerica Mortgage Corp.
164. Valley Vista Mortgage
163. New State Mortgage Company
162. Summit Mortgage Company
161. WMC
160. Paragon Home Lending
159. First Mariner Wholesale
158. The Lending Connection
157. Foxtons, Inc.
156. SCME Mortage Bankers
155. Aapex Mortgage (Apex Financial Group)
154. Wells Fargo (various Correspondent and Non-prime divisions)
153. Nationstar Mortgage
152. Decision One (HSBC)
151. Impac Lending Group
150. Long Beach (WaMu Warehouse/Correspondent)
149. Expanded Mortgage Credit Wholesale
148. The Mortgage Store Financial
147. C & G Financial
146. CFIC Home Mortgage
145. All Fund Mortgage
144. LownHome Financial
143. Sea Breeze Financial Services
142. Castle Point Mortgage
141. Premium Funding Corp
140. Group One Lending
139. Allstate Home Loans / Allstate Funding
138. Home Loan Specialists (HLS)
137. Transnational Finance Wholesale
136. CIT Home Lending
135. Capital Six Funding
134. Mortgage Investors Group (MIG) – Wholesale
133. Amstar Mortgage Corp
132. Quality Home Loans
131. BNC Mortgage (Lehman)
130. First National Bank of Arizona
129. Chevy Chase Bank Correspondent
128. GreenPoint Mortgage – Capital One Wholesale
127. NovaStar, Homeview Lending
126. Quick Loan Funding
125. Calusa Investments
124. Mercantile Mortgage
123. First Magnus
122. First Indiana Wholesale
121. GEM Loans / Pacific American Mortgage (PAMCO)
120. Kirkwood Financial Corporation
119. Lexington Lending
118. Express Capital Lending
117. Deutsche Bank Correspondent Lending Group (CLG)
116. MLSG
115. Trump Mortgage
114. HomeBanc Mortgage Corporation
113. Mylor Financial
112. Aegis
111. Alternative Financing Corp (AFC) Wholesale
110. Winstar Mortgage
109. American Home Mortgage / American Brokers Conduit
108. Optima Funding
107. Equity Funding Group
106. Sunset Mortgage
105. Nations Home Lending
104. Entrust Mortgage
103. Alera Financial (Wholesale)
102. Flick Mortgage/Mortgage Simple
101. Dollar Mortgage Corporation
100. Alliance Bancorp
99. Choice Capital Funding
98. Premier Mortgage Funding
97. Stone Creek Funding
96. FlexPoint Funding (Wholesale & Retail)
95. Starpointe Mortgage
94. Unlimited Loan Resources (ULR)
93. Freestand Financial
92. Steward Financial
91. Bridge Capital Corporation
90. Altivus Financial
89. ACT Mortgage
88. Alliance Mortgage Banking Corp (AMBC)
87. Concord Mortgage Wholesale
86. Heartwell Mortgage
85. Oak Street Mortgage
84. The Mortgage Warehouse
83. First Street Financial
82. Right-Away Mortgage
81. Heritage Plaza Mortgage
80. Horizon Bank Wholesale Lending Group
79. Lancaster Mortgage Bank (LMB)
78. Bryco (Wholesale)
77. No Red Tape Mortgage
76. The Lending Group (TLG)
75. Pro 30 Funding
74. NetBank Funding, Market Street Mortgage
73. Columbia Home Loans, LLC
72. Mortgage Tree Lending
71. Homeland Capital Group
70. Nation One Mortgage
69. Dana Capital Group
68. Millenium Funding Group
67. MILA
66. Home Equity of America
65. Opteum (Wholesale, Conduit)
64. Innovative Mortgage Capital
63. Home Capital, Inc.
62. Home 123 Mortgage
61. Homefield Financial
60. First Horizon Subprime, Equity Lending
59. Platinum Capital Group (Wholesale)
58. First Source Funding Group (FSFG)
57. Alterna Mortgage
56. Solutions Funding
55. People’s Mortgage
54. LowerMyPayment.com
53. Zone Funding
52. First Consolidated (Subprime Wholesale)
51. EquiFirst
50. SouthStar Funding
49. Warehouse USA
48. H&R Block Mortgage
47. Madison Equity Loans
46. HSBC Mortgage Services (correspondent div.)
45. Sunset Direct Lending
44. Kellner Mortgage Investments
43. LoanCity
42. CoreStar Financial Group
41. Ameriquest, ACC Wholesale
40. Investaid Corp.
39. People’s Choice Financial Corp.
38. Master Financial
37. Maribella Mortgage
36. FMF Capital LLC
35. New Century Financial Corp.
34. Wachovia Mortgage (Correspondent div.)
33. Ameritrust Mortgage Company (Subprime Wholesale)
32. Trojan Lending (Wholesale)
31. Fremont General Corporation
30. DomesticBank (Wholesale Lending Division)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ECC Capital/Encore Credit
24. Lender’s Direct Capital Corporation (wholesale division)
23. Concorde Acceptance
22. DeepGreen Financial
21. American Freedom Mortgage, Inc.
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial

@Mizuki: Thanks for that. The Bank of Under-the-Mattress for Scaredy-Pants is starting to look more appealing ; )

@ auguslan—TFR Credit Union is not on any watch list or ailing list. It appears to be a non profit of sorts.

Yes, Mizuki. Non investment banks do fail. There are some that failed before we ever got into these straits. But as I said, many banks are going to fail, possibly hundreds more. But there are thousands of banks, and as I said, nearly every damn one of them would have to collapse (and hey, people are going to have to put their money SOMEWHERE, there are going to have to be SOME banks that don’t fail, and when they get influxes of deposits when competitor banks fail it’s going to shore up their bottom lines if there is indeed any shoring up that needs to be done), because right now it’s primarily the banks that invested in bad mortgages or mortgage backed securities that are going tits up and not all banks are in that boat, the vast majority of non investment banks have far less exposure to this problem. And again, not only would the entire banking system and all banks have to fail, but the government itself would have to pretty much fail, and boy, if that happens, money under your mattress isn’t going to be worth as much as toilet paper anyway, so might as well wipe your ass with it. The FDIC is backed with the full faith and credit of the United States government. If you have less than 250k, you will NOT LOSE A PENNY, unless our whole country goes down in flames, guaranteed.

@dale—what then would account for 1 and 3 month T-Bills selling at zero and even negitive yield, in massive amounts like 30 billion and 50 billion per day, if smart money did not see an event like you allude to? I understand your point in theory, but in reality we will soon get to see the result of a meltdown first hand.

None of us can even begin to imagine what is in store in the near term.

It’s all about investor panic. What happens in the market has zero to do with what’s really happening, it’s all about what people EXPECT to happen. Expectations actually lead actions in our market, and yes, a bank failure is a prime example. If EVERYONE expects a bank is going to fail, EVERYONE is going to take their money out of that bank at the same time, it’s called a bank run. But then they have to put that money SOMEWHERE. People are going to expect that certain banks are going to make it and they are going to put their money there, and these are the banks that are going to succeed. It’s only if people start being convinced that the only way to keep their money safe is to keep it in cash (and think about how impracticable that is in today’s society…I haven’t used a check in 5 years), only THEN will EVERY SINGLE bank fail, and only then will the government have to cough up 5 trillion dollars, and to be honest, the government has already demonstrated that it could create 3 trillion out of thin air, it can create another 5. Yes, that would mean horrible deflation of our dollar, but trust me, you put your money in a bank you WILL get it back.

Is there a way/place to see how my particular bank is faring?

A banker friend of mine shared with me last months list, and I believe that it is available on a subscription basis.

The FDIC also announced that in the third quarter, the Deposit Insurance Fund (DIF) decreased by 23.5 percent

http://www.fdic.gov/news/news/press/2008/pr08137.html

Here is a list of all the US banks. On the far right of the chart the health of the banks are listed from 0–500.

Any bank less than 100 is at high risk of failure.

http://www.lewrockwell.com/chris/banks/banks.html

Dale, look back up at the first answer. The FDIC only holds 1% of the actual deposits. The banks aren't failing because of investor panic. The banks are failing because they compromised their loan practices by taking HUGE risks. Granted, the folks taking out the loans should have known better. But they aren't responsible to investors. The banks are. The funny thing is that the bankers will only get rich off the whole bailout. There are a whole set of investors who have been waiting for this to happen again (http://www.nytimes.com/2008/12/29/us/29bank.html). And the taxpayers get to make them rich - again.

Indy Mac failed when investors rushed to pull out deposits. Wamu and Wachovia nearly the same but they were sold, fire sale. So did Bear Stearn, and yes, the GOP cronies will make more billions of dollars off the misery they caused, again.

Here’s a little update for everyone.

FDIC Chairwoman Bair Says Insurance Fund Could Be Insolvent This Year