Recent bank failures have required the Federal Deposit Insurance Corporation to make payments to depositors. The FDIC is called in when a bank fails and can't give depositors the cash in their bank accounts. A lot of focus has been on the limits of FDIC insurance, so that depositors are protected. But there hasn't seemed to be as much focus on the actual ability of the FDIC to pay claims.

Bankrate.com has a nice article about the FDIC and how it works. The agency is funded with insurance premiums paid by banks for the coverage on their deposits. Can the FDIC run out of money to pay depositors? Yes, the agency could be giving out more than it's bringing in from insurance premiums. But if that happens, the FDIC can borrow money which would be paid back via future collections of insurance premiums paid by banks.

Funds at the FDIC are currently lower than legally allowed. The law requires it to have $1.15 on hand for every $100 of insured deposits sitting in banks. Currently, it has only $1.01 for every $100 of insured deposits. How will this difference be made up? The agency is trying to raise insurance premiums for 2009, so that increase along with a hope that other banks don't fail (further depleting cash reserves) will help the FDIC bring its cash balance back up.

In keeping with the trend of shutting down banks late on Friday afternoon, the tenth shutdown of the year occurred on Friday. Integrity Bank of Alpharetta was closed by the Georgia Department of Banking and Finance. Why Fridays? It gives officials a couple of days to assess things and prepare for dealing with consumers.

$974 million in deposits at Integrity will be taken over by Regions Bank of Birmingham. The FDIC is reporting that it will end up paying out an estimated $250 million to $350 million for insured deposits.

Why another bank failure? It's said that this one can be blamed on the real estate market. Integrity specialized in real estate lending and grew quickly, but as soon as the real estate market got sketchy the problems started. Late last year there was a management shakeup and the bank was delisted from the Nasdaq market early in 2008.