Banks large and small continue to drop like flies. The Federal Deposit Insurance Corp (FDIC) was set up in the wake of the Great Depression to guarantee depositors' funds when a bank fails. The FDIC is funded by insurance payments and fees made by banks. The wave of bank failures that includes megabanks Indymac and Washington Mutual, has placed the greatest stress the FDIC's funding ability since the S&L crisis of the Reagan/Bush era.
Despite a recent hike in fees that banks pay to the fund, the latest reports indicate that the FDIC is planning on borrowing the money from banks themselves. Suddenly, instead of paying for their insurance, the banks will be earning interest.
From the wires:
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