US FDIC may pay out almost $12 bln through 2010

WASHINGTON, July 29 (Reuters) - The Federal Deposit Insurance Corp could pay almost $12 billion to cover insured bank deposits through fiscal 2010 if more banks fail, updated White House budget estimates show.

So far this year, seven banks have failed, including IndyMac Bancorp Inc IDMC.PK, the third largest bank failure in U.S. history.

The FDIC has already put the cost of IndyMac's failure to its insurance fund at between $4 billion and $8 billion.

The White House's mid-year budget review, issued on Monday estimates the FDIC's insurance fund will pay out $2.54 billion in fiscal year 2008, which ends Sept. 30, another $9.21 billion in 2009 and $150 million in 2010.

In its February budget proposal, the Bush administration had projected the FDIC would not pay any claims and instead build up its reserves by $9.1 billion between 2008 and 2010, making about a $21 billion swing to the latest numbers.

"The recent bank failures occurred after we locked down our (latest) numbers, but those numbers reflected aggregate banking industry conditions, including higher prospects for deposit insurance losses," said Corinne Hirsch, a spokeswoman for the White House Office of Management and Budget.

The FDIC declined to comment on the White House estimates.

The FDIC oversees an industry-funded reserve of about $53 billion used to insure up to $100,000 per deposit and $250,000 per individual retirement account at insured banks.

At the end of the first quarter, some 90 institutions were on the FDIC's watch list and historically about 13 percent of banks placed on it have failed. The list is due to be updated next month.