Bank Insurance Fund


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Bank Insurance Fund (BIF)

Bank Insurance Fund

Also called the BIF. A pool of money created in 1989 by the FDIC to insure deposits made by banks that are members of the Federal Reserve System. The BIF was created to separate bank insurance money from thrift insurance money (which came from the Savings Association Insurance Fund). While this was likely beneficial for a time because of the savings and loan crisis, it created a perverse incentive for banks and thrifts to reclassify themselves as the other (i.e. a bank to a thrift or a thrift to a bank), depending on which fund had lower fees at a given time. This led to the passage of the Federal Deposit Insurance Act of 2005, which abolished the Savings Association Insurance Fund and the BIF and created a single Deposit Insurance Fund.

Bank Insurance Fund

The federal fund administered by the Federal Deposit Insurance Corporation, which insures the deposits of individuals who invest at banks that are members of the Federal Reserve System. This includes all national banks and state banks that choose to join the Fed. The fund was created in 1989 in order to separate the insurance funds for commercial banks from those that insure thrift institutions.

Bank Insurance Fund

The new name of the former fund of the Federal Deposit Insurance Corporation (FDIC).The FDIC is still alive and kicking,only the fund has changed names.

References in periodicals archive ?
Second, should the Bank Insurance Fund and the Savings Association Insurance Fund be merged?
The level of deposit insurance premiums paid by banks (BIFPREM) into the Bank Insurance Fund (BIF) does not enter the deposit supply equation, but since it should affect banks' demand for deposit funds, it is one of the instruments that we employ to identify the residual supply equation.
Those failures and their attendant costs placed a great deal of pressure on the Bank Insurance Fund. In 1991 the number of commercial banks on the problem bank list of the Federal Deposit Insurance Corporation (FDIC) exceeded 1,000 institutions with more than half a trillion dollars in assets.
The Bank Insurance Fund (BIF) insures bank deposits and is fully capitalized so banks pay a flat annual fee of only $2,000 for insurance on their deposits while thrifts must pay the undercapitalized Saving Association Insurance Fund about $.23 per $100 of deposits (about $800,090 per year).
Length of time to failure = f(bank assets, city population, cost to bank insurance fund of bank failure, change in bank assets, Senator from bank's home state on the Senate banking committee, number of representatives from bank's home state on the House banking committee, regulator identity, and region of the country).
Many adequately capitalized thrifts exited the Savings Association Insurance Fund (SAIF) and joined the Bank Insurance Fund (BIF).
In the authorizing legislation, the FDIC Improvement Act (FDICIA), Congress sent a clear message to banking regulators that the safety of the bank insurance fund required supervisors to scrutinize bank lending practices more rigorously and to limit risk-taking.
The recent taxpayer bailout of the thrift system and the losses experienced by the bank insurance fund indicate some of the weaknesses in this safety net.
In addition, losses of the Bank Insurance Fund were larger among the banks that borrowed from the Federal Reserve in their last year.
In a piece of incredible folly, the FDIC voted in September to reverse a modest increase in the premiums banks pay to the FDIC's Bank Insurance Fund.
Clearly, this has placed tremendous strain on the Bank Insurance Fund (BIF).
The sheer number of bank failures and mergers and acquisitions between strong and weak banks since the deregulation legislation of 1980 and 1982 put severe pressure on the solvency of the FDIC's Bank Insurance Fund (BIF).