What is Savings Association Insurance Fund (SAIF)?

The Savings Association Insurance Fund (SAIF) was a government insurance fund in the United States that protected depositors from losses caused by institutional failure.

SAIF was established in the aftermath of the late 1980s savings and loan crisis, which resulted in the failure of over 1,000 of America's savings and loan institutions, costing taxpayers more than $160 billion. It was merged with the FDIC's Bank Insurance Fund in 2006. (BIF).

Understanding the Savings Association Insurance Fund (SAIF) The Savings Association Insurance Fund, or SAIF, was established to replace the Federal Savings and Loan Insurance Corporation, or FSLIC, which had gone bankrupt during the 1980s S&L crisis. Despite being recapitalized several times with tens of billions of taxpayer dollars in the latter half of the 1980s, FSLIC was eventually abolished, to be replaced by SAIF as administered by the FDIC.

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 established the fund to provide similar consumer protection as the Federal Deposit Insurance Corporation, or FDIC, does for bank accounts. During the Great Depression, the FDIC was established in 1933 to protect consumers' savings and restore trust in America's banks.

Before being folded into the FDIC's Bank Insurance Fund (BIF), the SAIF had 1,430 members, roughly 16% of the FDIC's main bank fund members, and insured an estimated $709 billion in deposits, roughly 33% of the BIF's estimated deposits. Furthermore, unlike BIF-member institutions, SAIF-member institutions are geographically concentrated.

Merger of SAIF Using BIF

The FDIC managed SAIF as a separate fund until 2006, when it merged it with another of the agency's banking insurance programs, the Bank Insurance Fund. Prior to the merger with BIF, SAIF was primarily funded by two sources of revenue: interest earned on investments in US Treasury obligations and deposit insurance assessments. Other sources of funding could include US Treasury loans, the Federal Financing Bank, and the Federal Home Loan Banks.

For insurance purposes, the FDIC has borrowing authority from the US Treasury on behalf of the SAIF and the BIF.

The Maximum Obligation Limitation (MOL) statutory formula limited the amount of obligations the SAIF could incur to the sum of its cash, 90 percent of the fair market value of other assets, and the amount authorized to borrow from the US Treasury. The SAIF's MOL was $21.0 billion on December 31, 2005 and 2004, respectively.

As part of the Federal Deposit Insurance Reform Act of 2005, the United States Congress mandated that SAIF be merged with another of the FDIC's administered funds, the Bank Insurance Fund, in March 2006.

For some time, the idea of merging with BIF had been discussed. SAIF has been regarded as vulnerable since its inception. Economist Robert Oshinsky explained why in a 1999 FDIC report: "partly due to its small size and partly due to its geographical concentration SAIF-member institutions make up a much smaller proportion of US banking organizations than Bank Insurance Fund members."

FAQ

What exactly is the 'Savings Association Insurance Fund - SAIF'?

A government insurance fund that protects depositors from losses caused by the failure of savings and loans and thrift institutions in the United States. The Savings Association Insurance Fund was established in the aftermath of the 1980s savings and loan crisis, which saw many of America's savings and loan institutions fail due to poor real estate investments. The SAIF, which was run by the FDIC until 2006, was intended to provide similar coverage to the FDIC for bank accounts.

'Savings Association Insurance Fund - SAIF' Definition

The Federal Savings and Loan Insurance Corporation, which went bankrupt in the 1980s, was replaced by the Savings Association Insurance Fund. Following the passage of the Federal Deposit Insurance Reform Act of 2005, the insurance fund was merged with another of the FDIC's administered funds, the Bank Insurance Fund (BIF).

Features

Following the savings and loan crisis of the 1980s, the SAIF was established to provide deposit insurance.
The SAIF (Savings Association Insurance Fund) was a reserve fund established to assist customers of failed savings and loans or thrifts.
In 2006, the fund was absorbed into the FDIC's Bank Insurance Fund (BID).

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