Problem Banks - No Problem?

The FDIC recently announced that their 'problem bank' list has grown to include over 400 banks.

In an effort to keep the FDIC insurance fund strong as some of these banks fail, all banks have to pay extra fees to the FDIC.  What does this mean to you?  Is it a problem?

Catastrophe is not likely as long as your money is FDIC insured, but you'll probably pay more for banking in coming years.  Fees banks pay to the FDIC are a cost of doing business, similar to insurance premiums (in a way).  That cost has gone up with special assessments designed to keep the FDIC strong.

As costs rise, banks will likely pass them on to customers like you.  Yields on savings accounts will be under pressure, loans will cost more, and increased transaction fees may come out of the woodwork.

Is 400 a high number of problem banks? It depends. Former FDIC chief Bill Isaac reminds us that there were 1500 banks on the list in 1991.

Further reading:

• Deposit-insurance fund needs money, and that will cost consumers
• What Happens in Bank Failures?
• How FDIC Insurance Works