How secure is FDIC?

Zero Hedge is probably the only place I trust to get news. The reason for this is that Zero Hedge offers tons of data, charts, and information. It also covers a lot of topics not really touched by the mainstream media. After all the MSM only covers the same eight things over and over.

A few nights ago, I came across an article on Zero Hedge that was completely disturbing. To sum it up, new legislation is being passed to cover financial derivatives under FDIC. The financial derivatives would take precedence before bank deposits.

When I was younger, I had the question of what would happen if a bank failed today. What would happen to the deposit of a customer. People told me that if the bank were to fail, the government has an insurance program that would reimburse the customer up to $250,000. At the time, I was satisfied with the answer.

I was satisfied with the answer until I thought of the following question. What would happen if the FDIC were to fail?

If the FDIC were to fail, then the holder of the bank deposit would be out of luck. So, how much money is in the FDIC?

A quick Google search found me the answer also at Zero Hedge. As of March 19 2013, the FDIC has only $25 billion in the program. $25 billion may seem like a lot, but this amount is meant to insure $9.3 trillion in bank deposits. FDIC accounts for not even 1 percent of the total amount of bank deposits.

With recent legislation, FDIC will have to guarantee financial derivatives as well. Today, there are more than $300 trillion worth of derivatives.

If you feel the need, take whatever measures you can to mitigate your risk.