Lax action by regulators led to higher losses for FDIC


When the economy was booming and banks were flourishing, regulators appear to have been asleep at the switch. Unfortunately for U.S. taxpayers, that means that the losses to the FDIC insurance fund are greater. Now, a few years later, with the fund rapidly running out of money, the percentage of failed bank assets that have to be covered seems poised to grow.

The fund now stands at $13 billion, but considering the promises made to BB&T (BBT) after it took over Colonial bank, it seems like the fund could be depleted rapidly. The immediate cost to the fund is $2.8 billion and the FDIC entered into a loss-share agreement on approximately $15 billion of the $22 billion in assets.