SEPARATING THE SAFE FEDERAL INSURERS FROM THE SHAKY ONES

September 30, 1991

First, the Federal Savings and Loan Insurance Corporation, which
insured thrifts, ran out of cash in 1986. Now the banks' Federal
Deposit Insurance Corporation may follow. The General Accounting
Office, the federal watchdog agency, says the FDIC ''will likely be
insolvent'' by year-end unless it gets a loan from the Treasury. Are
all the federal insurance funds backing your savings, investments and
pensions likely to fail? No. ''The program covering credit unions,
for example, is relatively sound now,'' says James Barth, a finance
professor at Auburn University.
An appraisal of each of the major federal or federally chartered
insurers (see below) shows the range in their health, from poor to
excellent. If a program is listed as being in poor condition, sooner
or later your taxes will go up to assist the fund.
-- FDIC Bank Insurance Fund
What it covers: $100,000 per account at 12,400 banks
Reserves: $4.5 billion, or 23 cents per $100 of insured deposits,
down from $1.10 in 1987
Condition: Poor
Another 80 or so FDIC-insured banks are likely to fail this year.
So Congress and the President will soon raise the FDIC's $5 billion
credit line, perhaps by $65 billion, to see it through at least
several years.
-- FDIC Savings Association Insurance Fund
What it covers: $100,000 per account at the 2,521 FDIC-insured
savings and loans
Reserves: Zero
Condition: Poor
SAIF, the successor organization to FSLIC, is not expected to be
back on its feet until 1994. In the meantime, S&Ls are protected by
the Resolution Trust Corporation, the agency set up in 1989 to clean
up the S&L mess. The government has already poured $80 billion into
the RTC, but that still isn't enough. Congress is expected to cough
up another $80 billion later this fall.
-- National Credit Union Share Insurance Fund
What it covers: $100,000 per account in 12,860 NCUSIF-insured
credit unions
Reserves: $2.4 billion, or $1.26 per $100 of insured deposits
Condition: Excellent
The GAO has called this fund, which protects 88% of credit unions,
the safest of all federal deposit insurance programs.
-- Pension Benefit Guaranty Corporation
What it covers: Up to $27,000 of annual pension benefits per
employee
Reserves: $3.2 billion
Condition: Good
Most analysts believe the federal pension-insurance fund won't
need a taxpayer bailout soon because the agency's investment income
and the premiums it collects from employers cover current costs. Bear
in mind, however, that the PBGC doesn't guarantee the widespread
401(k) savings plans or the pensions of nonprofit employers.
-- Securities Investor Protection Corporation
What it covers: $500,000, of which no more than $100,000 can be
cash, per customer per firm for 10,000 SIPC-insured brokerages.
Investment losses aren't covered.
Reserves: $651 million
Condition: Excellent
The international accounting firm Deloitte & Touche says the
brokerage-funded SIPC could easily withstand the failure of the
nation's largest brokerage. But be careful: even if your firm carries
SIPC insurance, as nearly all do, any checks you write to its
uninsured subsidiaries -- a real estate partnership, perhaps -- won't
be guaranteed.

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