As FDIC fund dwindles, foreign banks could save the day

As the FDIC fund dwindles to its lowest point since 1992, foreign banks are stepping up to save the day. Fewer U.S. banks have the reserves to buy failed banks, so the FDIC is looking at changing the rules to allow private investment groups to buy banks. It's also turning to foreign banks, especially those that already have a presence in the U.S.

The FDIC bank rescue fund had a balance of $13 billion on March 31. Since that time three major bank failures -- BankUnited Financial Corp in May and Colonial BancGroup and Guaranty Financial Group in August -- cost the fund $10.7 billion. Another 53 banks also failed in the meantime, with an estimated total cost for all bank failures since March 31 of $16 billion. Even at $13.2 billion the fund was at its lowest point since 1992, when it was $178.4 million. Since March, banks have paid fees so the fund isn't insolvent, but it may be close.