FDIC was very close to Insolvency during the Financial Crisis. Given that FDIC insures trillions of dollars in deposits, and has reserves totaling only $50 billion, comment on the following four ideas, and analyze its implications. What metrics should we use in the evaluation?
Roll back its individual deposit coverage back to $100,000 from $250,000.
Double its premium charges across the board for all banks.
Charge riskier banks higher premiums, even if it leads to lack of profitability
Levy an additional charge, directly or through the Fed, to the general public.
Sample Solution
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