WASHINGTON — Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort.
The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation’s largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.
Treasury has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage-finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns.
Eleven federally insured banks and thrifts have failed this year, including Pasadena, Calif.-based IndyMac Bank, by far the largest shut down by regulators.
Additional failures of large banks or savings-and-loan companies seem likely, and that could overwhelm the FDIC’s insurance fund, experts say.
Treasury Secretary Henry Paulson said Monday that the country’s commercial banking system “is safe and sound” and that “the American people can be very, very confident about their accounts in our banking system.”
