Under Dodd-Frank, these larger regional players would contribute larger assessments to the FDIC Deposit Insurance Fund.
These suits maximize recoveries for creditors of the failed bank receivership, including uninsured depositors and the deposit insurance fund.
With this rate of growth, the Deposit Insurance Fund would have to be huge by the end of September 2020.
The agency characterized the transaction as being done on an "open bank basis, " with no risk to the deposit insurance fund.
Any one of them is big enough to sink the Federal Deposit Insurance Fund and require another federal bailout, with but one stupid move.
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If the FDIC had additional funding they could bolster the Deposit Insurance Fund (DIF) and suspend bank assessments for community banks under a total asset threshold.
Keep in mind that the costs of Fannie Mae and Freddie Mac are unlimited through 2012 at least, and that the FDIC Deposit Insurance Fund is essentially broke.
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On the other hand, to prevent people from ever again experiencing the loss of their life savings as banks went out of business, banks are regulated to prevent "unsafe and unsound" business practices so as to protect depositors and the federal deposit insurance fund.
And a common deposit-insurance fund could also credibly reduce the risk of bank runs in vulnerable countries.
Because the incentives of subordinated-debt holders are closely aligned with those of the deposit-insurance fund (and hence of taxpayers).
Quite apart from the cost to the FDIC's deposit-insurance fund, anything close to that would prove logistically overwhelming for regulators.
Brazil reduced reserve requirements and gave banks and its deposit-insurance fund incentives to buy up the loan portfolios of smaller banks.
Depositors in other countries, who were entitled to compensation from the Icelandic deposit-insurance fund, found that the pot in Reykjavik was too small to pay them when the banks went bust.
Financial institutions fund the Federal Deposit Insurance Corporation, which serves as an insurance policy for bank depositors.
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The mutualisation of risk may have to encompass a euro-zone bank-resolution fund as well as a joint deposit-insurance scheme.
Well if we ignore that banks themselves fund the government bureaucracy that is the FDIC, the hypothesis about deposit insurance and moral hazard is questionable.
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