FDIC Report : Bank failures will cost $12 billion by 2016

WASHINGTON (MarketWatch) 

The Federal Deposit Insurance Corp. on Monday projected that bank failures will cost the agency $12 billion for the five years ending in 2016

The agency made the estimate in a report providing new details about its deposit insurance fund, a pool of capital funded by fees paid by banks and used to protect depositors when institutions fail
According to the report, the fund balance has increased for eight consecutive quarters, following seven quarters of decline and stands at $11.8 billion
It has risen by $33 billion from a low of negative $20.9 billion at the end of 2009
In October, 2011, the FDIC predicted that failures for a five-year period of 2011 through 2015 would cost the agency $19 billion
The new report said that the projected costs for that five-year period remains “approximately” the same
However, James Chessen, the chief economist at the American Bankers Association, said in a statement that the FDIC’s fund is even healthier than expected and that the agency has been “overly conservative” in setting aside for failures that have not happened
He added that banks will provide more than $65 billion in revenue to the FDIC over the next five years, more than five times what the agency expects in failure costs