FDIC revises down cost of bank failures

WASHINGTON Tue Apr 12, 2011 11:55am EDT

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WASHINGTON (Reuters) - U.S. regulators estimate the cost of bank failures will drop with the economy recovering and the banking industry becoming more stable.

The Federal Deposit Insurance Corp said on Tuesday it is now estimating that bank failures will cost the industry-funded insurance fund about $45 billion from 2010 through 2014, compared with a prior estimate of $52 billion.

Regulators warned that while this is good news, there are still enough economic problems to temper optimism.

"There are obviously a lot of uncertainties, a few black swans flying over our heads" said FDIC Chairman Sheila Bair. "Let's hope they don't land."

The Deposit Insurance Fund, financed by banks that pay into the fund, guarantees individual accounts up to $250,000.

It is used to cover the cost of bank failures, which surged during the financial crisis but are expected to slow this year. In 2010, 157 banks failed.

(Reporting by Dave Clarke, Editing by Gerald E. McCormick)

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