Deposit Insurance Fund - DIF

DEFINITION of 'Deposit Insurance Fund - DIF'

A fund that is devoted to insuring the deposits of individuals by the Federal Deposit Insurance Corporation (FDIC). The Deposit Insurance Fund (DIF) is set aside to pay back the money lost due to the failure of a financial institution. The DIF is funded by insurance payments made by the banks.

BREAKING DOWN 'Deposit Insurance Fund - DIF'

Account holders at banks feel more secure if their deposits are insured. For example, if your bank closed its doors in 2009, you would be covered up to $250,000. This reduces the same type of fear that caused the bank run in the 1930s. A common use of the DIF number is to compare it to the total assets of banks on the "FDIC Problem Banks List," which is issued quarterly. The FDIC could not run out of money because it could borrow from the Treasury Department, but large losses would mean higher premiums for the remaining banks in the following years.

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