Notes from the CEO
FDIC Remains Financially Strong in the Face of U.S. Debt Concerns
It looks like a debt deal will be reached before tomorrow’s deadline and our country will not default on its obligations. While this is good news it hardly solves all the problems that our country faces and in the coming weeks we’ll read and hear more about it than most of us care to.
In case you are wondering how all this affects your FDIC insured deposits with a community bank like Five Star Bank, I thought I’d share the fact that the national debt ceiling is completely unrelated to FDIC insurance coverage.
The FDIC, an independent agency fully funded by banking industry premiums, is financially secure and has the resources it needs to protect customer deposits. Eighteen months ago banks paid to the FDIC three years of assessments — totaling nearly $46 billion — to assure the agency had the necessary funds to protect insured depositors. It has sufficient cash on hand today to meet its needs for the foreseeable future.
According to the American Bankers Association, the banking industry remains committed to making sure the FDIC has the resources it needs to protect insured depositors, and this commitment is independent and unrelated to the how the debt ceiling discussions are ultimately resolved. The banking industry’s capital — $1.53 trillion — stands behind the FDIC to assure it remains strong.
An FDIC spokesman Friday confirmed the agency’s strong financial position. “The FDIC’s Deposit Insurance Fund (DIF) has more than adequate liquidity, currently more than $44 billion, to meet all of our deposit insurance responsibilities,” he said. “The FDIC receives no federal tax dollars — insured financial institutions fund the DIF.”
James E. Beckwith
President and Chief Executive Officer
Five Star Bank