Banks may lend money to FDIC


In a reversal of fortunes, the FDIC may need to turn to healthy banks for money to help bail out the FDIC's insurance fund, which is running out of money as it tries to rescue all the failed banks, the New York Times reported Tuesday. Banks like this deal because they can lend money to the FDIC with government guarantees rather than pay additional fees to help prop up the deposit insurance fund.

If the FDIC decides instead to ask for a special assessment, then all banks must pony up to replenish the insurance fund, even those in trouble. This loan solution may therefore be a better choice to help the shakiest banks. The FDIC has already tapped the banks for one special assessment this year.

Originally published