WASHINGTON — Federal regulators Friday adopted a new system of special fees paid by U.S. financial institutions that will shift more of the burden to bigger banks to help replenish the deposit insurance fund.
The move by the Federal Deposit Insurance Corp. cut by about two-thirds the amount of special fees that would be levied on banks and thrifts.
It followed protests by small and community banks — with powerful allies in Congress — against a plan adopted in February that charged premiums based on the amount of deposits. Smaller institutions insisted they would be unfairly hit though they didn’t contribute to the financial crisis.
The FDIC board voted 4-1 to approve the new fee system. It is intended to raise $5.6 billion in the face of bank failures that have depleted the insurance fund. The lone dissent came from U.S. Comptroller of the Currency John Dugan, whose agency regulates national banks.
Additional emergency assessments could come later in the year. FDIC Chairman Sheila Bair said "there’s a good probability” that another would be needed in the fourth quarter, though it wouldn’t take effect without a public comment period.
The FDIC now expects bank failures will cost the bank insurance fund around $70 billion through 2013, up from a previous assessment of around $65 billion. The fund now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.
"There will be some shifting of the burden” to major banks, Bair said. "The shift is not huge to them. We’re asking them to pay more.”
The new FDIC emergency premium, to be collected from all federally-insured institutions, will be 5 cents for every $100 of a bank’s assets minus its so-called Tier 1, or regulatory capital, as of June 30.
The FDIC’s previous planned fee, intended to raise about $15 billion, was 20 cents per $100 of a bank’s insured deposits.
A measure of a bank’s health, Tier 1 capital includes common and preferred stock as well as intangible assets such as tax losses that can be used to reduce future earnings.
Because larger financial institutions tend to rely more heavily on funding from sources other than deposits, bigger banks would end up paying a heftier portion of the new assessment.
by the associated press
The move by the Federal Deposit Insurance Corp. cut by about two-thirds the amount of special fees that would be levied on banks and thrifts.
It followed protests by small and community banks — with powerful allies in Congress — against a plan adopted in February that charged premiums based on the amount of deposits. Smaller institutions insisted they would be unfairly hit though they didn’t contribute to the financial crisis.
The FDIC board voted 4-1 to approve the new fee system. It is intended to raise $5.6 billion in the face of bank failures that have depleted the insurance fund. The lone dissent came from U.S. Comptroller of the Currency John Dugan, whose agency regulates national banks.
Additional emergency assessments could come later in the year. FDIC Chairman Sheila Bair said "there’s a good probability” that another would be needed in the fourth quarter, though it wouldn’t take effect without a public comment period.
The FDIC now expects bank failures will cost the bank insurance fund around $70 billion through 2013, up from a previous assessment of around $65 billion. The fund now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.
"There will be some shifting of the burden” to major banks, Bair said. "The shift is not huge to them. We’re asking them to pay more.”
The new FDIC emergency premium, to be collected from all federally-insured institutions, will be 5 cents for every $100 of a bank’s assets minus its so-called Tier 1, or regulatory capital, as of June 30.
The FDIC’s previous planned fee, intended to raise about $15 billion, was 20 cents per $100 of a bank’s insured deposits.
A measure of a bank’s health, Tier 1 capital includes common and preferred stock as well as intangible assets such as tax losses that can be used to reduce future earnings.
Because larger financial institutions tend to rely more heavily on funding from sources other than deposits, bigger banks would end up paying a heftier portion of the new assessment.
by the associated press
No comments:
Post a Comment