Make us your home page
Instagram

FDIC boosts funds to pay for bank failures in 2010

“It will ensure that we are prepared to handle an even larger number of bank failures next year,” FDIC boss Sheila Bair said of the move.

Getty Images

“It will ensure that we are prepared to handle an even larger number of bank failures next year,” FDIC boss Sheila Bair said of the move.

WASHINGTON — The Federal Deposit Insurance Corp. on Tuesday agreed to nearly double the amount of capital in its 2010 budget that it is allocating to deal with bank failures and plans to add more than 1,600 staffers.

The agency released a $4 billion operating budget, of which $2.5 billion is to be used to fund the takeover of failed banks. The 2009 operating budget was $2.6 billion.

"It will ensure that we are prepared to handle an even larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions," FDIC Chairwoman Sheila Bair said.

The additional staff members will be needed to help the agency unwind failed banks. Only 84 of the new staff positions will be permanent additions to the FDIC, with the remaining 1,559 to be temporary additions during this period of high bank failures. So far in 2009, 133 banks have failed, while the agency announced last month that the number of distressed banks in the U.S. rose to the highest level in 16 years in the third quarter, to 552. FDIC officials expect many more banks to fail in 2010.

Responding to the financial crisis, the FDIC also introduced a preliminary proposal that could change the structure and transparency of consumer loan-backed securities, including a provision that asks whether consumer loan originators should be required to retain a piece of the credit risk of loans that they package and sell.

"Securitization encouraged a focus by nonbanks, and later some insured banks and thrifts, on deal production and fee generation at the expense of consumer protection and sound underwriting," Bair said. "The consequences of these combinations have been lethal to financial and economic stability."

Specifically, the proposal asks whether the sponsor should retain an economic interest in a "material portion" of credit risk of the financial assets, such as a 5 percent stake.

FDIC boosts funds to pay for bank failures in 2010 12/15/09 [Last modified: Tuesday, December 15, 2009 10:16pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, MarketWatch.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. 'Road to Nowhere' is back: Next phase of Suncoast Parkway coming

    Roads

    Despite intense public opposition and dubious traffic projections, the Florida Department of Transportation has announced that construction of the toll road known as "Suncoast 2" is expected to start in early 2018.

    The Suncoast Parkway ends at U.S. 98 just south of Citrus County. For years residents have opposed extending the toll road, a project dubbed the "Suncoast 2" into Citrus County. But state officials recently announced that the Suncoast 2 should start construction in early 2018. [Stephen J. Coddington  |  TIMES]
  2. A sports rout on Wall Street

    Retail

    NEW YORK — Sporting goods retailers can't shake their losing streak.

  3. Grocery chain Aldi hosting hiring event in Brandon Aug. 24

    Retail

    BRANDON — German grocery chain Aldi is holding a hiring event for its Brandon store Aug. 24. It is looking to fill store associate, shift manager and manager trainee positions.

  4. Lightning owner Jeff Vinik backs film company pursuing global blockbusters

    Corporate

    TAMPA — Jeff Vinik's latest investment might be coming to a theater near you.

    Jeff Vinik, Tampa Bay Lightning owner, invested in a new movie company looking to appeal to a global audience. | [Times file photo]
  5. Trigaux: Look to new Inc. 5000 rankings for Tampa Bay's future heavyweights

    Business

    There's a whole lotta fast-growing private companies here in Tampa Bay. Odds are good you have not heard of most of them.

    Yet.

    Kyle Taylor, CEO and founder of The Penny Hoarder, fills a glass for his employees this past Wednesday as the young St. Petersburg personal advice business celebrates its landing at No. 25 on the 2017 Inc. 5000 list of the fastest growing private companies in the country. Taylor, still in his 20s, wins kudos from executive editor Alexis Grant for keeping the firm's culture innovative. The business ranked No. 32 last year. [DIRK SHADD   |   Times]