Federal Deposit Insurance Case Study

Solution to the FDIC Deposit Insurance Fund: A Response
Mary Battle
July 1, 2013
Mrs. Cobb After recently discovering a desire to have a career in Office Administration, I decided to take classes to obtain further training. In one of my classes, English 121 to be exact; I was required to interview someone in the specific field that I would consider entering into. I chose to conduct my interview with Ashley Clevenger, a Senior Administrative Assistant at the Bank of Delmarva. Mrs. Clevenger informed me how she must constantly check for updates on regulations from the FDIC, the Federal Deposit Insurance Commission. The FDIC is a The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability
Tasto and Randolph tells that the Federal Deposit Insurance Reform Act of 2005 created the DIF, which allows the FDIC to try to recover failed insured banks and this fund has been emptied. The authors describe how bank failures skyrocketed, going from three to 140 failed FDIC Insured banks in 2009 and 157 banks in 2010, which put pressure on the FDIC DIF. They state, “The FDIC collects assessments from insured financial institutions in order to fund the DIF.” The FDIC determine the rate of assessments by placing banks into groups according to the bank’s CAMEL (capital, assets, management, earnings, liquidity and sensitivity to market risks) placing higher rates on banks likely to fail. Despite its attempts, these actions had the DIF balance hadn’t improved in the beginning of
These two approached are used by four-fifths of the nations, noted by the International Association of Deposit Insurers (IADI, 2008), because they provide an assurance to the system by collecting from all banks and spreading out the costs of insurance over time. Tasto and Randolph break down how the FDIC implemented the ex ante funding system, as well as continuing in the CAMEL rating system, however this decision didn’t fully resolve the