February 04, 2009

Federal regulators now believe U.S. bank failures will cost the deposit insurance fund more than $40 billion over the next four years as the economy weakens, a government official said Tuesday.Federal Deposit Insurance Corp. Chief Operating Officer John Bovenzi said the agency's estimate last fall of $40 billion in losses through 2013 probably will be surpassed.

He also said in testimony for a House hearing that Congress should more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion.The FDIC has never drawn on that credit line, but such an increase would ensure "that the public has no confusion or doubt about the government's commitment to insured depositors," Bovenzi said.