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Quick Hits: FDIC Groaning Under IndyMac Debt


Brief scrutiny of today's headlines.

The FDIC's takeover of California-based mortgage lender IndyMac may drain as much as 15% from the government's insurance fund.

This could result in higher premiums for all banks. A decision on the increase is expected by the fourth quarter, Bloomberg reports.

The July closure of IndyMac, the nation's third-largest bank failure, may require as much as $8 billion from the FDIC. Another 7 bank closures since August 1 may take another $1.2 billion from the fund, or about 2%.

The FDIC, an independent agency of the U.S. government created in 1933, protects deposits up to $100,000 per customer per bank. A depositor with additional accounts at several banks is covered up to $100,000 per bank. The Certificate of Deposit Account Registry Service -- CDARS, pronounced like the trees -- offers up to $50 million in FDIC coverage through multiple CDs handled by one bank.

The FDIC now lists 90 "problem" banks with combined assets of $26.3 billion. On March 31, the FDIC's insurance fund totaled $52.8 billion.

The FDIC is required to increase the fund when the reserve ratio, or current balance divided by the insured deposits, dips below 1.15%, or is expected to drop below that level in six months. The ratio fell to 1.19% in the first quarter of 2008 from 1.22% in the fourth quarter of 2007.

In 2007, premiums charged banks an average of 5.4 cents per $100 of insured deposits. Troubled banks pay higher rates. The new rate hasn't been determined.

The FDIC insured deposits totaling $4.43 trillion on March 31.

By deposits, Bank of America (BAC) is the nation's largest bank. It's followed by JPMorgan Chase (JPM), Wachovia (WB), Wells Fargo (WFC) and Citigroup (C).
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