FDIC Ups Budget to $4B as Bank Failures Climb

Federal Deposit Insurance Corp.The Federal Deposit Insurance Corp. said today it approved a $4 billion budget for 2010 – a 55 percent increase from this year – to safeguard against “an even larger number of bank failures.”
Bank failures climbed to 133 so far this year, the highest number since 1992. There were 25 bank collapses in 2008.
The unabated rate of foreclosures and the still increasing failures in commercial real estate loans have fueled the bank collapses.
The portion of the FDIC’s budget which covers bank failures will almost double to $2.5 billion, up from $1.3 billion in 2009.
The agency also will increase its staff to 8,653 next year, from 7,010 for this year. Almost all the additional staff will be temporary hires. They will assist with bank closings; perform work related to the management and sale of failed bank assets; and conduct bank examinations and other bank supervisory activities.
“The 2010 budget is a prudent and measured response to current conditions in the banking industry,” said FDIC Chairman Sheila Bair. “It will ensure that we are prepared to handle an even-larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions.”
The FDIC insures deposits at the nation’s 8,099 banks and savings associations. It also promotes “safety and soundness” of banks monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
U.S. banks will pay more than $45 billion before year’s end to cover premiums through the next three years, under an agency plan approved Nov. 12 to replenish the fund.
“It is important for the American people to know that none of the increase we are approving today will involve in any way the use of taxpayer funds,” said Bair.

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