FDIC Backup Fund Drops 20 Percent

The FDIC fund used to protect $4.5 trillion in U.S. bank deposits fell by 20 percent to $10.4 billion at the end of the second quarter—the lowest level since 1992. Though the FDIC must replenish its fund, which now represents just 0.22 percent of insured deposits, to a congressionally mandated minimum of 1.15 percent, the agency's chairman Sheila Bair says there are no plans "at this point in time" to tap the Treasury Department for help. Despite the depleted insurance fund, Bair cautioned in a news conference that the drop "does not diminish our ability to protect insured depositors." The failure of 81 banks (so far) due to soured loans from commercial real estate threatens to further diminish the FDIC's fund, which some analysts warn could fall further by the year's end.