Meet the Author

Joseph G. Haubrich |

Vice President and Economist

Joseph G. Haubrich

Joseph Haubrich is a vice president and economist at the Federal Reserve Bank of Cleveland, where he is responsible for leading the Research Department's Banking and Financial Institutions Group. He specializes in research related to financial institutions and regulations.

Read full bio

Meet the Author

Saeed Zaman |


Saeed Zaman

Saeed Zaman is an economist in the Research Department of the Federal Reserve Bank of Cleveland. His current research focuses on inflation measurement and forecasting, including nowcasting methods, and he contributes to the development of macroeconomic forecasting and policy models at the bank. His research interests also include inflation and prices, macroeconomic forecasting, monetary policy, and banking and financial institutions.

Read full bio


Economic Trends

FDIC Funds

Joseph G. Haubrich and Saeed Zaman

In 2007, deposits insured by the FDIC insurance fund grew at a 3.4 percent annual rate. As of December 31, 2007, the FDIC has insured $4.3 trillion of member deposits. Growth in reserves outstripped insured deposits. As a result, the insurance fund’s reserve-to-deposit ratio increased 1 basis point, from 1.21 percent at year end 2006 to 1.22 percent in 2007. The reserve-to-deposit ratio remained in the mandated target range of 1.15–1.5 percent.

Bank failures since 1995 have been miniscule in terms of numbers and total assets of failed institutions. After a record-breaking trend of 10 consecutive quarters without any bank failure, three institutions failed in 2007, with assets totaling $2.3 billion. The rarity of thrift institution failures over the past seven years contrasts vividly with the widespread solvency problems that plagued the industry throughout the 1980s.

At the end of 2007, the total number of problem institutions (those with substandard examination ratings) rose to 76, an increase of 26 institutions from the end of 2006. Moreover, the increase in the number of problem institutions led to an increase in the amount of total assets held by problem institutions, which ballooned to $22 billion from $8.3 billion over the same period. The jump in the number of problem institutions and the high value of those institutions’ assets —combined with the ongoing financial mess—suggest that the Deposit Insurance Fund’s losses might go up in the near future.