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From the FDIC's own website at (www.fdic.gov):

"The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.

An independent agency of the federal government, the FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.

The FDIC receives no Congressional appropriations - it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. With an insurance fund totaling more than $17.3 billion, the FDIC insures more than $4 trillion of deposits in U.S. banks and thrifts - deposits in virtually every bank and thrift in the country...."

If you do the math, you'll find that $17.3 billion is less than one-half of one percent of $4 trillion. Sounds kind of risky to me, and I'm not the only one that sees a potential disaster on the horizon:

"March 4 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said the deposit insurance fund could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency. 'Without these assessments, the deposit insurance fund could become insolvent this year,' Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group..."

Read more at:

http://www.huffingtonpost.com/2009/03/04/fdics-bair-insolvency-a-p_n_171717.html

Maybe hiding a few bucks under your mattress isn't such a bad idea after all.

- Ed Smith, Publisher
The EHS Letter Manual