Bank depositors all know they are protected up to $100,000 per account. For many, that's the only piece of security they have as they watch the banking industry writhe through wrenching losses and pending mergers.
But what happens if the dwindling Bank Insurance Fund, or BIF, runs dry?
"When we run out of money, we can print some more," quipped Caryl A. Austrian, a spokeswoman for the Federal Deposit Insurance Corp., the agency that oversees the insurance fund.
The most recent projection from the FDIC is that the fund balance will fall to between $1 billion and $3 billion by the end of the year, depending on the size and number of bank failures in the next few months.
The General Accounting Office, however, said last month that it expected the fund to be $1.4 billion in the hole by the end of the year.
Whichever is true, no one expects the government to pull the plug on its long-held promise to back depositors' funds. But no one expects the money needed to back that promise to be found easily.
To help replenish its reserves, the FDIC boosted earlier this year the amount of premiums banks must pay into the fund -- from 19 cents for each $100 of domestic deposits to 23 cents for each $100. The fund also has reserved money for bank failures that it can reasonably foresee.
Those moves, combined with fewer bank failures during the first half of 1991, reversed a three-year slide of the fund. In the first six months of the year, the BIF grew nearly $500 million, reaching $4.52 billion on June 30.
The lower number of bank failures -- down to 57 this year from 99 a year earlier -- has some concerned. They predict that more failures could still come.
FDIC Chairman L. William Seidman, talking about the second quarter figures for the nation's banks, said earlier this month: "It doesn't look like it's much worse; it doesn't look like it's getting a whole lot better."
How, then, can the fund raise the cash it needs?
Under the most likely scenario, the BIF would borrow its way out.
The fund can borrow up to nine times its net worth. Although its net worth -- or the fund balance -- could be zero by the end of the year, it has a $5 billion line of credit available from the Treasury Department.
So, the fund could raise $45 billion using the $5 billion as its base.
Other plans call for increasing the premiums paid by the nation's 12,000 banks or having Congress allocate more money.
Regardless, the FDIC is steadfast: Depositors will be protected.