NCPA - National Center for Policy Analysis

FDIC Just Keeps Growing As Bank Failures Plummet

October 2, 1995

The Federal Deposit Insurance Corporation (FDIC) is a case study in the failure of Congress to cut the government work force - even in agencies whose primary mission no longer exists and whose workers have little left to do.

  • The banking crisis peaked in 1989 with 206 failures that year, and by 1992 the FDIC had in liquidation $43 billion in assets of failed banks.
  • This year there will be no more than 20 bank failures, and assets in liquidation will be no more than $12 billion.
  • Yet there are still more than 10,000 employees at the FDIC - up from 4,000 twelve years ago when the number of failures was about what it is today.
  • This year the FDIC plans to spend $975 million to liquidate some $20 billion in assets - nearly four times the standard cost were private industry to do the job.

For the most part, FDIC revenues come from about 4.5 cents in taxes on every $100 customers deposit. Although this tax is levied on the banks, customers eventually pay it in the form of lower returns on CDs and savings and checking accounts.

Source: Stephen Moore (Cato Institute), "Parkinson's Law at the FDIC," Washington Times, October 2, 1995.


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