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This report discusses recent actions taken by the FDIC in support of financial and housing markets, which include restoration of the Deposit Insurance Fund, the development of the Temporary Liquidity Guarantee Program, efforts to reduce foreclosures, and establishment of the proposed Public-Private Investment Fund. Legislation such as H.R. 786 (introduced by Representative Barney Frank); H.R. 1106, Helping Families Save Their Homes Act of 2009 (introduced by Representative John Conyers, Jr., with 24 co-sponsors); and S. 541, The Depositor Protection Act of 2009 (introduced by Senator Christopher Dodd with 12 co-sponsors) have also been introduced to increase the effectiveness of the FDIC's efforts to respond to recent market weaknesses.

This report contains the proposals for change on the federal deposit and share insurance.

A letter report issued by the General Accounting Office with an abstract that begins "Created in 1933 to insure bank deposits and promote sound banking practices, the Federal Deposit Insurance Corporation (FDIC) plays an important role in maintaining public confidence in the nation's financial system. In 1989, legislation to reform the federal deposit insurance system created three funds to be administered by FDIC: the Bank Insurance Fund and the Savings Association Insurance Fund, which protect bank and savings deposits, and the FSLIC Resolution Fund, created to close out the business of the former Federal Savings and Loan Insurance Corporation. GAO is responsible for obtaining reasonable assurance about whether FDIC's financial statements for the funds are presented fairly, whether it maintains effective internal controls, and whether FDIC has complied with selected laws and regulations."

Testimony issued by the General Accounting Office with an abstract that begins "GAO is required to annually audit the financial statements of the three funds administered by the Federal Deposit Insurance Corporation (FDIC): the Bank Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF), and the FSLIC (Federal Savings and Loan Insurance Corporation) Resolution Fund (FRF). GAO is responsible for obtaining reasonable assurance about whether FDIC's financial statements for BIF, SAIF, and FRF are presented fairly in all material respects, in conformity with U.S. generally accepted accounting principles, and whether FDIC maintains effective internal controls and FDIC has complied with selected laws and regulations. Created in 1933 to insure bank deposits and promote sound banking practices, FDIC plays an important role in maintaining public confidence in the nation's financial system. In 1989, legislation to reform the federal deposit insurance system created three funds to be administered by FDIC: BIF and SAIF, which protect bank and savings deposits, and FRF, which was created to close out the business of the former Federal Savings and Loan Insurance Corporation. GAO was asked by the Chairwoman of the House Subcommittee on Oversight and Investigations, Committee on Financial Services, to discuss the results of its February 13, 2004, report, Financial Audit: Federal Deposit Insurance Corporation Funds' 2003 and 2002 Financial Statements (GAO-04-429)."

The Federal Deposit Insurance Corporation (FDIC) currently insures bank deposit balances up to $100,000. According to some observers, statutory protection creates moral hazard problems for insurers because it allows banks to engage in risky activities. As an example, moral hazard was a key contributor to huge losses suffered when thrift institutions failed during the 1980s. This brief by Panos Konstas outlines a plan to reduce the risk of government losses by replacing insured deposits with uninsured deposits and eliminating some of the costs of deposit insurance. His plan proposes a self-insured (SI) depositor system that places an intermediary between the lender (saver) and borrower (bank) in the credit-flow chain. The FDIC would guarantee saver loans and allow the intermediary to borrow at the risk-free interest rate if the intermediary's bank deposit is statutorily defined outside the realm of FDIC insurance. The risk is therefore transferred to depositors (intermediaries); thus creating incentives for depositors to earn a rate of return at least equal to the cost of borrowing plus a risk premium based on the risk profile of banks.

A letter report issued by the General Accounting Office with an abstract that begins "Pursuant to a legislative requirement, GAO reviewed the financial statements of the Bank Insurance Fund, the Savings Association Insurance Fund, and the Federal Savings and Loan Insurance Corporation Resolution Fund for the years ended December 31, 1999 and 1998. GAO also reviewed: (1) the Federal Deposit Insurance Corporation (FDIC) management's assertions regarding the effectiveness of its internal controls as of December 31, 1999; and (2) FDIC's compliance with laws and regulations during 1999."

A letter report issued by the General Accounting Office with an abstract that begins "Pursuant to a legislative requirement, GAO reviewed the financial statements of the Bank Insurance Fund, the Savings Association Insurance Fund, and the Federal Savings and Loan Insurance Corporation Resolution Fund for the years ended December 31, 1998 and 1997. GAO also reviewed: (1) the Federal Deposit Insurance Corporation (FDIC) management's assertions regarding the effectiveness of its internal control as of December 31, 1998; and (2) FDIC's compliance with laws and regulations during 1998."

Distributed to some depository libraries in microfiche. ; Includes bibliographical references. ; Mode of access: Internet.

Intro -- FEDERAL DEPOSIT INSURANCE CORPORATION AND NATIONAL CREDIT UNION ADMINISTRATIONASSESSMENTS AND ACTIONS -- FEDERAL DEPOSIT INSURANCE CORPORATION AND NATIONAL CREDIT UNION ADMINISTRATIONASSESSMENTS AND ACTIONS -- CONTENTS -- Preface -- Chapter 1 Federal Deposit Insurance for Banks and Credit Unions -- Summary -- Introduction -- Deposit Insurance for Banks -- Recent Status of the DIF -- Legislative Efforts to Support the DIF -- Increase in FDIC Borrowing Authority -- Elimination of a Procyclical Bias in Deposit Insurance Pricing -- Expansion of the Deposit Assessment Base -- FDIC Risk Analysis Approach to Price Assessments -- Share Insurance for Credit Unions -- Recent Status of the NCUSIF -- Legislative Efforts to Support NCUSIF -- NCUA Restructuring of Corporate Credit Union Regulatory Framework -- Appendix A. Resolution Process for Insolvent Depository Institutions -- Bank Failures and the FDIC -- Credit Union Failures and the NCUA -- Appendix B. Recent FDIC Actions to Replenish the Deposit Insurance Fund -- Increase in Deposit Insurance Assessments -- Prepaid Insurance Assessments -- Temporary Liquidity Guarantee Program -- Appendix C. Recent NCUA Actions to Stabilize the Credit Union System -- Increase in NCUSIF Premium Assessments -- Temporary Guarantees -- End Notes -- Chapter 2 Financial Audit: Federal Deposit Insurance Corporation Funds' 2011 and 2010 Financial Statements -- Why GAO Did This Study -- What GAO Recommends -- What GAO Found -- Abbreviations -- Opinion on the DIF's Financial Statements -- Opinion on the FRF's Financial Statements -- Opinion on Internal Control -- Significant Deficiency -- Compliance with Laws and Regulations -- Objectives, Scope, and Methodology -- FDIC Comments -- Deposit Insurance Fund's Financial Statements -- Balance Sheet -- Statement of Income and Fund Balance -- Statement of Cash Flows

A letter report issued by the General Accounting Office with an abstract that begins "Effective controls over information systems are essential to ensuring the protection of financial and personnel information and the security and reliability of bank examination data maintained bythe Federal Deposit Insurance Corporation (FDIC). As part of GAO's 2002 financial statement audits of the three FDIC funds, we assessed (1) the corporation's progress in addressing computer security weaknesses found in GAO's 2001 audit, and (2) the effectiveness of FDIC's controls."