Risk-Based Deposit Insurance
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Definition of 'Risk-Based Deposit Insurance'
Deposit insurance with premiums that reflect how prudently banks behave when investing their customers' deposits. The idea is that flat-rate deposit insurance shelters banks from their true level of risk-taking and encourages poor decision-making and moral hazard. Although not all bank failures are the result of moral hazard, risk-based deposit insurance is thought to prevent bank failures. Banks that have a higher risk exposure pay higher insurance premiums.
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Investopedia explains 'Risk-Based Deposit Insurance'
The Federal Deposit Insurance Corporation (FDIC) Improvement Act of 1991, passed in the aftermath of the Savings and Loan crisis, required the FDIC to switch from a flat-rate deposit insurance program to a risk-based deposit insurance program by 1994 (it actually made the switch on January 1, 1993). The FDIC uses the deposit insurance premiums it collects from banks to fund the Federal Deposit Insurance program. This program protects consumers by insuring deposits of up to $250,000 at member banks in the event of bank failure.
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Search results for 'Risk-Based Deposit Insurance'
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http://www.investopedia.com/articles/economics/09/fdic-history.asp
... are written into law and a risk-based premium system is created. 1993: Banks begin
paying premiums based on their risk. 1996: The Deposit Insurance Funds Act ...
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http://stocks.investopedia.com/stock-analysis/2011/FDIC-Reports-Profitable-Banking-System-BAC-JPM-C-WFC-USB-XLF-KBE0906.aspx
... Email. Net Income The report was issued by the Federal Deposit Insurance Corporation
(FDIC ... moved higher with the leverage capital, tier 1 risk-based capital, and ...
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http://www.investopedia.com/university/banking-system/banking-system6.asp
... Depression, the FDIC offers deposit insurance, guaranteeing that ... Through its insurance
operations, the FDIC ... or bank policies, if the risk-based capital ratio ...
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http://www.investopedia.com/articles/pf/07/mortgage_rate.asp
... hedge funds, foreign governments, insurance companies, and ... any security, loan or
deposit that has ... to help consumers make educated, risk-based mortgage decisions ...
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http://www.investopedia.com/articles/mortgages-real-estate/08/first-time-homebuyer-guide.asp
... For A Mortgage and Make A Risk-Based Mortgage Decision ... to rescind your offer and
get your deposit back ... to the property, obtaining private mortgage insurance or a ...
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http://www.investopedia.com/exam-guide/cfa-level-1/portfolio-management/portfolio-management-process.asp
... Personal Finance; Credit & Loans; Insurance; Retirement; Home & Auto; Savings; ... 15.18
Eurodollar Time Deposit Markets; 15.19 Characteristics of Forward Rate Agreements ...
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