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Restoring banking's safety net: deposit insurance's steeper cost

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  • Kory A. Killgo

Abstract

A recession now in its 21st month has presented tremendous challenges to the deposit insurance system. Actual and expected bank failures have left the Deposit Insurance Fund below its mandated level. The Federal Deposit Insurance Corporation has responded by raising the premiums banks pay. Premiums will rise for banks in the Dallas-based Eleventh Federal Reserve District--but not by as much as they will for banks in the rest of the country. This additional cost is an important consideration because every dollar spent on insurance is a dollar that can't be lent or otherwise invested.

Suggested Citation

  • Kory A. Killgo, 2009. "Restoring banking's safety net: deposit insurance's steeper cost," Southwest Economy, Federal Reserve Bank of Dallas, issue Q3, pages 16-19.
    • Handle: RePEc:fip:feddse:y:2009:i:q3:p:16-19:n:3
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