The FDIC shut down IndyMac over the weekend, and I read the following quote in the International Herald Tribune:

The bank is scheduled to reopen Monday as IndyMac Federal Bank, FSB, under the oversight of the?FDIC.

The FDIC estimates its takeover of IndyMac will cost between $4 billion and $8?billion.

I was wondering, where does that $4 to $8 billion come from?? Here’s an explanation from the internets:

Where does the FDIC get its money?
From assessments on insured banks, and interest on U.S. Government securities it holds.

How much do the insured banks pay the FDIC?
Insured banks pay annually a gross assessment of one-twelfth of 1 percent of their total deposits.

What direct commitment does the Treasury have to the FDIC?
The 1947 amendments to the Federal Deposit Insurance Corporation Act provide that the FDIC can borrow up to $3 billion from the U.S. Treasury at its discretion. The law directs the Secretary of the Treasury to put up this $3 billion any time the FDIC wants it.

NOTE: The website/book is from 1962, so the details may have changed since then (it references a $10,000 insured amount, which has obviously changed).

IndyMac had about $20 billion in deposits earlier in the year…? which means their annual assessment would have been around $17 million dollars…

Just like the PBGC, it may be self funded, but as soon as demand for coverage overwhelms that self-funding, it is ultimately the tax payers that are on the hook.