FDIC should tap Treasury.

COLUMN: In our opinion; Editorial Footnote 

The Federal Deposit Insurance Corporation - the entity that ensures bank deposits of up to $250,000 across the country - is itself running short of cash because of the billions in loans and guarantees it has made to support troubled banks. The FDIC is said to have only about $10 billion in the till, and will decide how to address its own cash-flow problem at a meeting next week.

The good news - of sorts - is that the FDIC has gotten through a similar crisis in the past, during the savings and loan crisis of the early 1990s. But how it goes about obtaining the cash it needs is important.

Banks already pay levies to the FDIC to cover the costs and risks of backing up deposits. Earlier this year, FDIC increased those levies, bringing in another $5.6 billion. Some feel it should do so again, but every dollar taken from the banking sector is a dollar that is not available for the loan activity necessary to promote economic growth.

Another option would be for the FDIC to borrow the money it needs from the banks. That, too, is problematic. While the banks would stand to get those funds back, the money would be temporarily out of play, reducing available investment capital. Such borrowing also would amount to little more than the FDIC and a weakened banking sector shuffling funds back and forth while waiting for the economy to recover.

Perhaps the best option - although far from a happy one - is to have the FDIC tap its line of credit with the Treasury Department. Washington has already committed so many billions in public money to bailouts and guarantees, that a strong and sustained economic recovery is the only hope of easing what is sure to be significant "payback pain" in the years ahead. Borrowing still more from the public till isn't a good choice, but it's better than sapping the strength of the banks themselves.