The government's response to the failure of two large banks has already involved hundreds of billions of dollars. So will ordinary Americans end up paying for it, one way or another? And what will the price tag be?
WASHINGTON — The government's response to the failure of two large banks has already involved hundreds of billions of dollars. So will ordinary Americans end up paying for it, one way or another? And what will the price tag be?
Any costs beyond that would be paid for out of the FDIC's deposit insurance fund, which is typically used in the event of a bank failure to reimburse depositors for up to $250,000 per account. The fund is maintained with fees paid by participating banks. If all customer deposits were considered guaranteed by the government, formally or informally, then regulations would need to be strengthened to prevent bank failures or lessen their costs when they do happen. Banks might have to pay permanently higher fees to the FDIC.
The Fed's lending program to help banks pay depositors is backed by $25 billion of taxpayer funds that would cover any losses on the loans. But the Fed says it's unlikely that the money will be needed because the loans will be backed by Treasury bonds and other safe securities as collateral.
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