How does the FDIC fund deposit insurance payouts?
Banking
Asked by Question Bot03/Mar/20171 answer
1 Answer
F
Faisal Khan
Answered 03/Mar/2017
All FDIC insured financial institutions pay a premium, like you would expect with any other insurance company and its customers.
The banks (who are customers of FDIC), pay a premium that FDIC pools into a central reserve. The reserve is what guarantees the bank depositors up to US$ 250,000 of funds protection (insured deposit limit), should the bank go under.
The reserve fund is ample in size to take on a few bank failures. If the FDIC needs more money in the event of multiple banking failures, then they can borrow the money from the US Treasury, which is allowed.
The banks (who are customers of FDIC), pay a premium that FDIC pools into a central reserve. The reserve is what guarantees the bank depositors up to US$ 250,000 of funds protection (insured deposit limit), should the bank go under.
The reserve fund is ample in size to take on a few bank failures. If the FDIC needs more money in the event of multiple banking failures, then they can borrow the money from the US Treasury, which is allowed.