Reverse Bailout: Feds May Seek Handout From Banks

FDIC looks to replenish funds after multiple bank failures

Tuesday, Sep 22, 2009  |  Updated 12:30 PM EDT
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Reverse Bailout: Feds May Seek Handout From Banks

Sheila Bair, head of the F.D.I.C., wants a bailout from banks, not the Treasury.

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Here's a switch: After a year of bailing out the banking industry, the federal government may soon be going hat in hand to the nation's lenders.

Regulators at the Federal Deposit Insurance Corp. are considering asking healthy banks to prop up the fund that insures bank deposits.  That pool has been depleted by several bank collapses since the economic meltdown of a year ago. The fund's balance currently stands at about $10 billion, a third of its size at the beginning of the year. One more major bank failure could wipe it out.

Other options include a special assessment from all banks and a loan from the Treasury, a solution FDIC head Sheila Bair wants to avoid. 

Bankers say that a special assessment, amounting to as much as $10 billion over the next six months, would further endanger already struggling banks. 

Read More:  MSNBC

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