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I. Introduction A college student, a multibillion-dollar company, and your grandmother all have something in common: the maximum amount federal insurance guarantees on their bank deposits. (1) The Federal Deposit [...]

"Want to spook out a local business leader? Ask him or her to serve on a bank board." (1) I. INTRODUCTION In 2010, 157 institutions insured by the Federal Deposit [...]

I. INTRODUCTION One of the many provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) (1) that has wide-ranging implications for the financial services industry [...]

The services that commercial banks offer have changed greatly since the 1980s because of deregulation, the expansion of information technology, and innovations in the types of services offered. Traditionally, commercial [...]

In recent years, policymakers in the Basel countries have begun exploring strategies for harnessing financial markets to contain bank risk. Indeed, the new Accord counts market discipline, along with supervisory [...]

Byline: George G. Pennacchi (1) Keywords: deposit insurance; FDIC Abstract: A common feature of many insurance systems is that they are 'backed' by an insurance fund and insurance premiums are adjusted to target this fund's reserves. This study analyzes the fund targeting policy of the Federal Deposit Insurance Corporation (FDIC). It examines the distortions to banks' cost of deposit financing that result from setting premiums in this manner. The study's framework is a multiperiod, multibank contingent claims model where the stochastic rates of return on individual banks' assets are assumed to be correlated and match the actual empirical distribution of a sample of U.S. banks. The model identifies factors that are likely to exacerbate distortions due to insurance mispricing. The relative merits of a targeting policy and a flat-rate insurance policy are discussed, and the real effects of insurance mispricing are estimated. A method for valuing a government subsidy under a reserve targeting policy is also presented. Author Affiliation: (1) Department of Finance, University of Illinois, Urbana Article History: Registration Date: 02/10/2004

The U.S. Treasury Department (1991) makes a strong case for consolidating federal bank regulatory authority. However, its proposal to eliminate direct FDIC authority over insured nonmember banks contributes little to this end because deposit insurance requires supervisory oversight. The U.S. Treasury Department (1991) also maintains an independent role for the Federal Reserve. Elimination of neither the insurance agency nor the central bank appears practical. A better approach to regulatory agency consolidation would combine supervision with deposit insurance and central banking in an institutional structure modified somewhat from the present Federal Reserve structure.

In this time of instability in the financial markets, the Federal Deposit Insurance Corporation (FDIC) wants to ensure that teens learn how to save, spend, and protect their cash. They [...]