Don’t Bank on It: FDIC Running Out of Money

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Driven by a tanking stock market, a lot of people are looking to move their money to a “safe” place. This is especially  true of older people, who don’t have the option to follow the advice that’s being doled out by most money managers, which is to “stick it out” and wait for the market to “come back.” The safest place of all is supposed to be an FDIC-insured bank, where it may earn no more than a pittance, but it will at least be protected, since up to $250,000 in deposits for each individual are backed by the federal government through the Federal Deposit Insurance Corporation.

The problem is, the FDIC is now running out of money itself. According to Bloomberg news:

Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency….

The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund.

Banks are reportedly upset that they are being asked to pay additional fees to the government to shore up the FDIC. They are accustomed to money flowing only in the other direction–from the government’s coffers into theirs.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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