7 in q2 2011 the largest segment of growth in

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Unformatted text preview: $250,000. This increase came from investors and businesses seeking safety from the EU debt crisis, taking advantage of the temporary unlimited FDIC insurance. While this flight to safety was felt more by the nation’s largest banks, the real winner was likely the FDIC Deposit Insurance Fund (DIF) as new deposits likely outweighed increases in bank equity. This transitory deposit growth is not expected to stimulate economic activity, loan growth, or even bank profits as they are expected to revert to higher interest crediting accounts when the EU debt crisis calms. • Problem Banks: Problem banks declined in the third quarter 2011, to 865 banks with assets of $372 billion, down from 888 banks with assets of $397 billion at the end of the first quarter. • The FDIC Deposit Insurance Fund: The FDIC reported in October that its recapitalization reaffirms that the banking industry is rapidly returning to health and that the losses once expected were overstated as fewer bank closures were required and those that were closed were completed at lower costs. These reserve adjustments and expanded premiums gave the fund its sixth-consecutive quarterly in...
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This note was uploaded on 02/11/2013 for the course MGMT 231 taught by Professor Yu during the Spring '13 term at Bauder.

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