FDIC increases budget dramatically

December 16, 2009|Associated Press

WASHINGTON - The Federal Deposit Insurance Corp. said yesterday that its 2010 budget will jump to $4 billion from $2.6 billion this year, and announced plans to hire more than 1,600 mostly temporary employees as it continues to grapple with bank failures.

The FDIC’s board voted at a public meeting to approve the 2010 budget, which includes $2.5 billion for resolving failed banks taken over by the agency. That’s up from $1.3 billion in 2009. The hiring plans will bring the number of FDIC employees to 8,653.

So far this year, 133 US banks have failed - the most in a year since 1992, at the height of the savings-and-loan crisis. They compare with 25 last year and three in 2007. The failures have cost the federal deposit insurance fund more than $30 billion so far this year.

FDIC chairwoman Sheila Bair has said most banks continue to be profitable but others continue to be stressed, and that the number of failures could rise next year. The agency expects the cost of bank failures to grow to about $100 billion over the next four years.

The number of problem banks on the FDIC’s confidential list as of Sept. 30 more than doubled to 552 - the highest level in 16 years - from 250 at the start of the year.

Even after the failures stop, the work and costs for the FDIC as receiver of the collapsed banks will go on, agency staffers noted yesterday.

Martin Gruenberg, the FDIC’s vice chairman and like Bair one of its directors, said the distressed labor market has enabled the FDIC to hire many highly qualified midlevel staff.