The following is from a Google search on 9/4/2025 titled "underfunded fdic fees for banks could end in non payment during a crisis". Read M.D.'s commentary at the end in red.
Underfunded fees for the Federal Deposit Insurance Corporation (FDIC) during a financial crisis are unlikely to result in non-payment due to the agency's robust funding structure and legal authorities. However, the need for large, sudden fees during a crisis can create significant stress on the banking system, which is a key concern for regulators.
How the FDIC is funded
The FDIC is funded entirely by the banking industry, not taxpayers, primarily through assessments paid by insured depository institutions.
Deposit Insurance Fund (DIF): The FDIC maintains the DIF, which receives income from quarterly assessments on banks and interest from investments in U.S. government obligations.
Borrowing authority: The FDIC is authorized to borrow up to $100 billion from the U.S. Treasury, a line of credit backed by the full faith and credit of the U.S. government.
Emergency funding: The agency also has the power to impose special assessments on the banking industry to recover losses from bank failures, particularly in cases where the "systemic risk exception" is invoked.
A crisis can strain the system, but payments are secured
Although a widespread crisis could weaken the financial health of many banks, forcing non-payment of FDIC fees is not a significant risk because of the FDIC's legal mandates and access to emergency funding.
Banks are legally obligated to pay: FDIC-insured institutions are required by law to pay their assessments. During the 2023 bank failures, the FDIC imposed a special assessment on larger banks to cover losses, and the banks were required to pay.
Systemic risk exception: When regulators determine a bank failure could pose a systemic risk to the financial system, the FDIC can guarantee uninsured deposits to prevent further bank runs. Any losses to the DIF from this action must, by law, be recovered through a special assessment on the banking industry.
Burden on surviving banks: The real concern is not non-payment, but the stress that high fees during a crisis place on healthy banks. In the 2008 financial crisis, large losses caused the DIF to go negative, and the FDIC considered a special assessment but was concerned about the burden on the already-fragile banking system. Ultimately, banks were required to prepay regular assessments, and the fund was later replenished.Political considerations: During a crisis, the FDIC may also face political pressure. In 2009, the agency chose to avoid drawing on its Treasury credit line, despite the DIF going negative, partly to avoid public perception of a taxpayer-funded bailout.
Key takeaway
While a banking crisis can dramatically increase the fees imposed on banks to replenish the Deposit Insurance Fund, the FDIC has the legal authority and financial tools to ensure those payments are made. The potential for banks to become too weak to pay is a central concern for regulators, who monitor capital and liquidity levels to prevent such a scenario and can tap backstop funding or impose emergency fees if needed.
M.D.'s comment: The red highlights are the "glimpse" of the weakness of the banking system. Instead of charging credible fees to banks for FDIC protected accounts, the government chooses to let banks run out with plenty of rope so if they go too far, they can just assess proper fees for insurance "after" the fact of a financial crisis/bank failure.
Insurance companies operate under a sound basis, whereas they are required to keep 3-6 pennies of capital in reserve on "top" of each dollar they take in for premium/annuity payments. So they have $1.03 to $1.06 in reserves to pay your claim if the company goes down. (Notwithstanding state reserve funds exist as well to bail out carriers that go bankrupt)
The 2025 FDIC DIF reserve ratio is 1.36%. Compare that to insurance companies above. THEN TELL ME THE FDIC INSURANCE IS SAFE WHEN THE NEXT 2009 CRASH COMES. PROVE ME WRONG!!!