FDIC announces higher bank fees
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| Thu, 03-05-2009 - 3:31pm |
It looks like we won't get new taxes, just a lot of new fees. When a bank pays a higher fee to the government, guess who winds up covering the cost?
While the unwashed masses were busy asking if Rush Limbaugh runs the RNC, our administration was adding to the cost of banking. The campaign of distraction seems to be working.
Our government seems to have decided that Main Street must pay for the sins of Wall Street.
http://www.tulsaworld.com/business/article.aspx?subjectid=51&articleid=20090228_51_E1_Inasca35864
State bankers decry FDIC fee
The one-time assessment is described as "outrageous."
In a scathing memo Friday, the Oklahoma Bankers Association lambasted a decision by the Federal Deposit Insurance Corp. to impose a one-time assessment on all banks of 20 cents for every $100 of their insured deposits.
The fee could mean lower bank earnings and a higher cost of doing business for customers.
"To say the least, this is outrageous," OBA President and CEO Roger Beverage stated in the memo. "Our member banks have played by the rules, done things appropriately, made a profit, served their communities and stood by while the Wall Street gang has gotten away with murder."
The memo, which was sent to about 250 OBA members, notes that the FDIC Board on Friday voted 4-to-1 for the one-time assessment to replenish the Deposit Insurance Fund, a reserve that helps repay depositors if their bank fails.
For Oklahoma, the one-time fee translates into about $94.8 million, or 14.6 percent of the banks' earnings for all of last year, Beverage said.
"There's a sense of frustration and growing anger I think by bankers who didn't cause the problem (and) whose reputation has been tarnished and badly abused, and now they're being asked to pony up for the sins of Wall Street," Beverage said in a phone interview.
He said 95 percent of the banks in Oklahoma are solid and safe.
The one-time assessment could be due by the end of the third quarter.
Banks will pay the fee in addition to what they pay each quarter for their FDIC premium insurance. Starting in the second quarter, that quarterly insurance premium for banks ranges from 12 to 16 cents per $100 of deposits, up from about 2 to 4 cents per $100 of deposits a year ago.
Beverage said he understands why the FDIC voted to impose the one-time fee, but that doesn't make it easier to accept.
The FDIC sustained bigger losses to the fund last year than it had planned, and there are additional problem banks this year. So, it is trying to bring the fund back to a reasonable level, in a fairly short period, and make certain that depositors are protected, Beverage said.
The Deposit Insurance Fund helps cover an individual's deposits dollar for dollar, including principal and any accrued interest, up to $250,000 in the event a bank fails and cannot repay.
The FDIC expects that bank failures will cost the insurance fund about $65 billion through 2013, up from an earlier estimate of $40 billion. So far, 14 banks have failed this year across the nation, preceded by 25 bank failures last year, including two of the biggest thrifts.
At the end of December, the Deposit Insurance fund contained $18.9 billion, its lowest level since 1987. That compares with $52.4 billion at the end of 2007.
"We're taking steps today to ensure that the deposit insurance system remains sound," FDIC Chairman Sheila Bair said at a board meeting where the changes were approved. "These steps are necessary because banks — and not taxpayers — are expected to fund the system."
John Reich, the one board member who voted against the fee increase, said it would unfairly burden smaller banks that didn't contribute to the financial crisis with reckless lending.
By the numbers
The FDIC expects that bank failures will cost its insurance fund about $65 billion through 2013, up from an earlier estimate of $40 billion.
U.S. banks and thrifts lost $26.2 billion in the last three months of 2008, the first quarterly loss in 18 years.
Banks more than doubled the amount they set aside to cover potential loan losses to $69.3 billion in the fourth quarter, compared with $32.1 billion a year earlier.
At the end of last year, 252 banks and thrifts were in trouble, up from 171 on Sept. 30.

http://uk.news.yahoo.com/18/20090305/tbs-fdic-warns-us-bank-deposit-insurance-8cc5291.html
FDIC warns US bank deposit insurance fund could tank
4 hours 50 mins ago
The US government is warning banks that its deposit insurance fund could go broke this year as bank failures mount. Skip related content
~It looks like we won't get new taxes, just a lot of new fees. When a bank pays a higher fee to the government, guess who winds up covering the cost?~
If your bank deposits are no longer covered (and the FDIC is close to that point), and there is a a predictable run on the banks, guess who winds up in a total mess?
~Our government seems to have decided that Main Street must pay for the sins of Wall Street.~
I thought that the GOP
Problem partially solved: