Dodd Moves to Lend FDIC $500B

By Kevin Spak,  Newser Staff
Posted Mar 6, 2009 8:23 AM CST
Senate Banking Committee Chairman Christopehr Dodd, left, and the committee's ranking Republican Richard Shelby, talk with Bob Corker, on Capitol Hill, Feb. 5, 2009.   (AP Photo/Susan Walsh)
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(Newser) – Senate Banking Chairman Chris Dodd has introduced a bill to allow the FDIC to borrow up to $500 billion from the Treasury Department, the Wall Street Journal reports. It’s the latest attempt to bolster the fund that insures consumer deposits, which has been ravaged by a string of bank failures. Last week, the FDIC proposed raising fees for the same purpose, provoking loud protests from bankers.

The measure comes at the insistence of Timothy Geithner, Ben Bernanke, and the FDIC's Sheila Bair. One provision in the bill, suggested by Bernanke, could turn the FDIC into another dispenser of bailouts, giving it expanded power to address “systemic risks” to the economy.