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Home >> Keeping Your Money Safe
What if the FDIC Goes Broke?
I read that the FDIC wants to increase insurance 900%. My bank is in the top 20 of the FDIC watch list. What if the FDIC goes broke? What then?
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 The FDIC is backed by the full faith of the U.S. government. They can't go broke unless you and others don't pay taxes. That won't happen.
You may be confusing some media information here. While people can run various calculations and determine which banks are financially healthier than others, that isn't a watch list from the FDIC. Many, many factors go into a bank's rating. You and I may see a bank's financial report, but that doesn't mean we know of additional capital available to the bank, so there are things regulators know that we cannot.
As to increasing insurance, the FDIC did increase your coverage. In general terms your accounts are insured to $250,000 instead of $100,000, and they are asking for increased premiums. The banks pay those premiums. Recently (March 2009) some large banks are publicizing that they are profitable, and more so than they have been in several quarters. Yes, some banks will fail, and some will flourish. Insured deposits will be paid. What is not recommended is putting uninsured deposits into an account if you can't afford that risk. Often these uninsured deposits are paid in whole or in part, but that doesn't mean they always will be.
Published on BankingQuestions.com 3/30/09
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