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Tuesday, March 12, 2013

FDIC Deposit Insurance Fund Balance at Multi-Year High

FDIC Deposit Insurance Fund The FDIC Deposit Insurance Fund (DIF) balance and related Provision for Insurance Losses (PIL) indicate continued improvement through the 3 months ended December 31, 2012. During the 2008 financial system crisis and the Great Recession, the Provision for Insurance Losses increased, and therefore the DIF decreased, as a result of bank failures and the resulting costs of seizure and liquidation. However, the FDIC problem bank list remains high which indicates ongoing bank failures and DIF costs. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted as occurring on this blog.

FDIC Deposit Insurance Fund by Quarter The FDIC Deposit Insurance Fund balance was +$32.96 billion at the quarter ending 12-31-12. This is the 7th consecutive quarterly positive balance, after 7 consecutive negative quarters, and a 17-quarter high. The peak balance was +$52.84 billion at QE 3-31-08. This was before the 2008 USA financial system crisis and Great Recession. The low balance was -$20.86 billion at the QE 12-31-09. The Provision for Insurance Losses (PIL), the cost of seizing and liquidating failed banks, was a negative -$3.34 billion at QE 12-31-12. The PIL peaked at +$21.69 billion for the QE 9-30-09. Prior to the QE 3-31-08, the PIL was an immaterial amount, positive or negative, of less than $100 million each quarter.



DIF Balance Increases (FDIC Quarterly Banking Profile, February 26, 2013) The Deposit Insurance Fund (DIF) increased by $7.7 billion during the fourth quarter to $33.0 billion. Assessment income of $2.9 billion, a negative provision for insurance losses of $3.3 billion, and $1.8 billion previously set aside for debt guarantees under the FDIC’s Temporary Liquidity Guarantee Program were the main drivers of growth.

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