FDIC May Need Additional Capital To Rescue Potential Banks-At-Risk

September 25, 2008 6:51 a.m. EST

Washington, D.C. (AHN) - As the financial crisis deepens, the banking sector in the U.S. may sink further as the Federal Deposit Insurance Corporation (FDIC) waits for another firm to file bankruptcy.

The Federal Deposit Insurance has kept the customers of at least 10 banks safe as it seized firms like IndyMac Bancorp after it filed for bankruptcy protection.

Once the second-largest U.S. independent mortgage lender, IndyMac Federal Bank filed Chapter 7 with the U.S. Bankruptcy Court in Los Angeles on July 11 and asked the court to appoint a bankruptcy trustee.

According to its filing with the Securities and Exchange Commission, the Pasadena, California-based Indymac's liabilities are between $100 million and $500 million, with less than 50 creditors.

Late August, the Kansas-based Columbian Bank and Trust Co. of Topeka also collapsed and was forced to file bankruptcy on bad loans and heavy writedowns.

The bank, with $752 million in assets and $622 million in total deposits, was the country's ninth bank to be taken over by the Federal Deposit Insurance Corp. this year.

Accounts worth more than $100,000 per deposit per bank are not insured, according to the FDIC.

The FDIC does not cover annuities, mutual funds, life-insurance policies, stocks and bonds.

Reports claim that the FDIC has more than 100 banks-at-risk on its watch list but will not disclose information as it could trigger panic among their customers.

With the current number of banks being managed by FDIC and to support potential banks-at-risk after collapsing, the government's agency would require an additional $150 billion to bail them out, according to reports.