As the FDIC's bank failure list continues to grow, the United States government is warning banks that its deposit insurance fund could run out of money this year.

The Federal Deposit Insurance Corporation defended its plans to raise fees on banks and charge an emergency fee to build the fund and maintain investor confidence.

While the new fees will put additional pressure on banks already struggling in a time of financial crisis and a deepening recession, they are critical to keeping the insurance fund solvent and protected.

The FDIC stated that the rapidly deteriorating economic conditions not only in the U.S. but globally raise the prospects of "a large number" of bank failures through 2010.

The emergency fee, which is said to be a temporary measure, will cost lenders but help build the rapidly depleting deposit insurance fund that currently insures U.S. individual customer deposits up to $250,000, increased from $150,000 less than a year ago.

The FDIC reported a sharp depletion of the deposit insurance fund in the fourth quarter of 2008 due to bank failures, the fund now sits at 19 billion dollars from 34.6 billion in the third quarter. An additional 22 billion dollars have been set aside to cover losses on failures anticipated during 2009.

Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

Last week, the FDIC proposed raising fees on banks in order to build up its deposit insurance fund, which had just $19 billion at the end of 2008. That idea provoked protests from banks, which said such a burden would worsen their already shaken condition.

The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted. The bill would allow it to borrow $100 billion absent that approval. Currently, its line of credit with the Treasury is $30 billion.

The FDIC's deposit-insurance fund has fallen precipitously with 25 bank failures in 2008 and 16 so far in 2009. Some bank failures have a bigger impact on the fund than others, as IndyMac's failure cost the fund more than $10 billion, while many others cost the fund less than $100 million.

A 1991 law generally caps the amount of money the FDIC can borrow from the Treasury at $30 billion, and the FDIC hasn't borrowed money from the Treasury in more than a decade.