Savings Association Insurance Fund (SAIF)

What Was the Savings Association Insurance Fund (SAIF)?

The Savings Association Insurance Fund (SAIF) was a government insurance fund for savings and loans and thrift institutions in the United States to shield depositors from [losses due to institutional failure](/guideline w).

SAIF was made in the consequence of the savings and loan crisis of the late 1980s, during which poor real estate investments prompted the disappointment of more than 1,000 of America's savings and loan institutions, costing taxpayers more than $160 billion. In 2006 it was combined with the FDIC's Bank Insurance Fund (BIF).

Understanding the Savings Association Insurance Fund (SAIF)

Savings Association Insurance Fund initially supplanted the Federal Savings and Loan Insurance Corporation, or FSLIC, which had become indebted during the 1980s S&L crisis. Regardless of being recapitalized several times in the last half of the '80s with a huge number of taxpayer dollars, FSLIC was in the end canceled, to be supplanted by SAIF as administered by FDIC.

The fund was first settled by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to give comparable protective coverage to consumers as the Federal Deposit Insurance Corporation, or FDIC accomplishes for bank accounts. FDIC was made in 1933 during the Great Depression as a manner to safeguard consumers' savings and reestablish trust in America's banks.

Before it was collapsed into the FDIC's Bank Insurance Fund (BIF), the SAIF had 1,430 members, about 16 percent the number of the FDIC's principal bank fund members and the SAIF insured an estimated $709 billion in deposits, approximately 33 percent of the estimated deposits insured by the BIF. Likewise, SAIF-member institutions are geologically focused, in contrast to BIF-member institutions.

SAIF's Merger With BIF

SAIF was administered as an independent fund by FDIC until 2006 when it combined with one more of that organization's banking insurance programs, the Bank Insurance Fund. Before the merger with BIF, SAIF was essentially funded from two revenue streams: interest earned on investments in U.S. Treasury obligations and deposit insurance evaluations. Other funding could likewise come from U.S. Treasury loans, the Federal Financing Bank, and the Federal Home Loan Banks.

The FDIC has borrowing authority from the U.S. Treasury for insurance purposes on behalf of the SAIF and the BIF. A statutory formula, known as the Maximum Obligation Limitation (MOL), limited the amount of obligations the SAIF can cause to the sum of its cash, 90 percent of the fair market value of different assets, and the amount authorized to be borrowed from the U.S. Treasury. The MOL for the SAIF was $21.0 billion as of December 31, 2005, and 2004, separately.

In March of 2006, the U.S. Congress called for SAIF to be merged with another of the FDIC's administered funds, the Bank Insurance Fund, as part of the entry of the Federal Deposit Insurance Reform Act of 2005.

The possibility of a merger with BIF had been getting looked at for quite a while. Since it was made, SAIF had been considered helpless. In a 1999 FDIC report, economist Robert Oshinsky made sense of why: "partly in view of its small size and partly in light of its geographic concentration. SAIF-member institutions comprise a lot smaller portion of U.S. banking organizations than Bank Insurance Fund member institutions do."

Features

• The SAIF was framed to give deposit insurance in the wake of the 1980s savings and loan crisis.
• The Savings Association Insurance Fund (SAIF) was a reserve fund set up to bail out customers of failed savings and loans or thrifts.
• The fund was absorbed into the FDIC's Bank Insurance Fund (BID) in 2006.