The 165 banks that toppled like dominoes in the financial crisis have stuck the FDIC with a hefty tab to the tune of $9 billion, the Wall Street Journal reports. Regulators have helped shoulder the burden of bad assets and loans at the failed banks; the loss-sharing agreements encouraged healthier institutions to purchase failed ones. The FDIC, which has agreed to take on most future losses in the arrangements, expects to shell out another $21.5 billion over the next three years.
The FDIC expects to cover more than half of that figure this year. But the payments have been smaller than foreseen, and much cheaper than a fair-market-based solution to the bad loans, officials say. “The process is working,” said an FDIC head. Some bankers agreed. “We are getting better performance than we thought due to a combination of ways that these loans are getting settled,” noted one. (Read more FDIC stories.)