DIF is a private insurance company dedicated to safeguarding the deposit of those covered under FDIC. The money in DIF is put aside to compensate the amount lost due to the bankruptcy of an institution of finance. The DIF is funded through insurance payouts made by banks. The DIF is comprised of more than 6000 member banks.
How the Deposit Insurance Fund Works
Bank customers feel more secure when they have their deposits insured as a deposit insurance Fund provides the guarantee that they are. If, for instance, your bank shut down in 2009, you'd be covered the amount of up to $250,000. This will help reduce the anxiety that led to the bank crisis in 1930. One common use for this DIF Balance of the account is to analyze the balance to bank assets listed on the "FDIC Problem Banks List," published quarterly. The FDIC can't be in financial trouble because it can take loans through Treasury Department. Treasury Department, but large losses could mean higher rates to the other banks in subsequent years.
Recent Reforms
The Dodd-Frank Act modified the FDIC's practices for managing funds by establishing requirements regarding DRR and changing the definition of the assessment base used to determine banks' quarterly assessments. Its DRR ratio represents that of the DIF amount divided by the estimated insured deposit. In response to these changes, the FDIC created a comprehensive long-term strategy to control the DIF that reduces pro-cyclicality while achieving reasonable, stable assessment rates across the cycles of credit and economic growth and ensuring a positive account in case of a bank crisis. As part of the plan, it was decided that the FDIC Board adopt the existing assessment rate schedules and a 2% DRR.
Federal Deposit Insurance Act requires the FDIC's Board to determine a target of DRR or DIF every year. Since 2010 the Board has stuck to the 2 percent DRR for each year. An analysis using fund loss historical data and simulation of income data from 1950 to 2010 revealed that the reserve ratio had to surpass 2% before the onset of two crises that occurred over the past 30 years to keep an increase in the balance of funds and steady assessment rates through each crisis. The FDIC believes that the DRR of 2% is a long-term objective and the minimum requirement to withstand future crises of the same magnitude.
Fund Management
The FDIC regulates the size of the DIF to keep the public's trust within the banking system and to deal with bank failures. Additionally, for assessments, the DIF gets interested in its securities. Loss provisions diminish the DIF in case of bank failures and FDIC operating costs.
To respond to these changes made by the law, the FDIC created a comprehensive long-term management strategy for the DIF that was designed to decrease pro-cyclicality and achieve low, steady rates of assessment across credit and economic cycles while maintaining a positive balance in the event of an economic crisis. The DIF reserve ratio and balance are reported in the quarterly Bank Profile.
Examples
The bank balances were protected by the Federal Deposit Insurance Corporation, which is a fund that covers all funds of the public that are held in depositories with a valid license. Deposits or Investments Deposits that comply with Indiana law (IC 5-13) and with banks in the Indiana State of Indiana at year close should be fully protected.
The deposit accounts of all of the Company's bank subsidiaries are covered to the extent of the limits applicable in FDIC to the maximum extent allowed in law, as well as the rules and regulations of FDIC. There is no action to cancel or revoke the validity of the insurance that is in progress or, to our knowledge, has been Company or threatened.
