The Federal Deposit Insurance Corp. fund guaranteeing customer deposits in U.S. banks is rebuilding at a faster pace as the banking industry puts widespread failures behind it, the agency said in a report.
The federal backstop, funded by assessments on banks, was at $33 billion at the end of 2012, up from a deficit of $20.9 billion at the end of 2009 as the credit crisis caused banks to fail. The FDIC predicted it will spend $5 billion to cover bank shutdowns in the next five years, a projection that has been rapidly declining as the industry improves, according to a report issued today updating the fund’s health.
The fund has less than its required reserve ratio of 1.15 percent of the deposits it insures, and the FDIC expects to reach that goal by 2018. The reserve ratio was at 0.45 percent at the end of 2012, according to the agency.
The fund returned to a positive balance in 2011, and it anticipates assessments on banks to drop about $1.4 billion from 2012 to about $11 billion this year. The Dodd-Frank Act of 2010 required the FDIC to increase the target ratio to 1.35 percent - - a level it must reach by Sept. 30, 2020.
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