FDIC

Georgian Bank in Atlanta Georgia was the 95th institution to fall prey to bad loans and real estate woes and more failures are predicted in the months and years to come. What could be worse? Analysts believe that failures could result in an insufferable depletion of the FDIC's insurance fund for deposits, which has already reached its lowest point in nearly 20 years.

The FDIC is fully backed by the government; however, there is only so much money in the fund for deposits. In June, the FDIC's fund fell to $10.4 billion, which is extremely low, yet, it is expected to need to spend an additional $70 billion to support bank failures by 2013.

The FDIC's takeover of Georgian Bank alone is expected to cost $892 million as it has to cover each depositor's account for up to $250,000. Currently, there is $21.6 billion in cash, along with the insurance fund, which means the money to support banks is still insufficient as it tries to manage the multitude of banks closing their doors.

To try to keep up, the FDIC is considering a number of options, including borrowing from healthy banks, tapping its $500 billion credit line with the Treasury Dept., or imposing a special fee on the banking industry. In the meantime, the Treasury Dept and federal bank regulators are looking at new banks to see which ones might qualify for bailout funds that didn't in the original group receiving $700 billion. To date, there are a whopping 416 banks on the list.

Bernanke recently noted that the recession is "technically" over, but it certainly doesn't show in the seemingly continued weakening of the economy.

Have you been affected by any of the 95 bank closures? What was your experience?

An issuing bank is a bank that issues a certificate of deposit (CD). The CD can be of several forms for example regular certificates of deposit (CDs), variable-rate CDs, eurodollar CDs, multi-step CDs, market-linked CDs.

It is important to verify the stability and strength of any issuing bank that you come in contact with, if you are going to be investing in that bank. For example, you want to know that the bank that issued your CD is stable. Although most issuing banks are insured by the FDIC, you may exceed FDIC insurance limits, and you may also end up with a product that is not FDIC insured.

Issuing banks can also issue credit cards, but you usually wouldn't worry about this case since you will be borrowing the money rather than lending (investing) it to the bank. When you are the borrower you don't care whether the bank is stable or not, you got your money and it is your creditworthiness that concerns the bank not the other way round.

Before you commit to a financial relationship of any kind with an issuing bank, be sure to consult with a financial advisor in order to evaluate the safety and wisdom of what you're doing. You don't want to make any mistakes when it comes to your hard-earned money.

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Please...

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