And those premium costs would be? I talked with someone today who has been in banking for 32 years, and she says increasing the premium costs of the FDIC insurance would likely cause several more banks teetering on the edge to fail. I don't we can afford that many more failures.
I’d like to see what the actual cost of the FDIC insurance is to the banks. It would be awful if they had to lower bank salaries to cover it (sarcasm).
Actually, the insurance would be a cost passed on to the depositors in the form of a lower return on your savings accounts. But wouldn’t people pay for that in this environment? I think they would.
And the Fed can use that $700 billion as a backstop on the insurance to reduce the premiums.
Buying the bad mortgages won’t solve the problem if “bank runs” which has now been created as a result of this. We need much higher FDIC limits.
I looked up the FDIC rates. They charge between 5 basis points and 43 basis points. Strong banks pay 5 bps and really weak banks 43bps on a sliding scale.
So if I am earning 1.4% on my bank account at a strong bank, I now would earn only 1.35% to presumably get more coverage.