FDIC Assesses Banks on Emergency Basis & Raises Fees

Posted: Fri Feb 27, 2009 9:47 pm

Today 2/26/09, declaring the decline in its insurance fund balance to be an emergency, the Federal Deposit Insurance Corporation board imposed a one-time $15 billion increase in insurance fees that will be collected from the nation’s FDIC insured banks. In addition, the FDIC's board imposed an increased annual insurance fee. Together, the two new fees will take an additional $27 Billion in fees this year from America's remaining banks.

See: http://www.nytimes.com/2009/02.....r=1&hp

Needless to say, the managers and owners of economically healthy small and mid sized banks are livid, but could do nothing about the increased assessment.

While most banks, large and small, are members of the American Bankers Association, the industry's lobbying arm, the ABA lobbying focus tends to favor the interests in laisse faire style of regulation, which favors the largest of banks, most of whom are borderline insolvent.

Given the Treasury Department Inspector General's recent findings that the FDIC lost $10.7 Billion from the insurance fund, due to the Bush era Treasury Department's failure to proactively regulate IndyMac Bank, thereby costing the small and mid sized banks an increased insurance premium, it will be interesting to see whether this insurance fee increase is the "straw that broke the camel's back" in terms of small and mid sized banks forming their own lobbying organization, to advocate for bank regulation which protects the balance in the FDIC insurance.