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FDIC board votes for more assessments

May 23, 2009 at 8:42 AM   |   Comments

WASHINGTON, May 23 (UPI) -- The U.S. Federal Deposit Insurance Corp. says it will charge banks more to insure investors' deposits as bank failures drain FDIC insurance funds.

The agency's five-member board voted Friday to collect larger assessments from banks at a time when many such institutions are scrambling for funds just to stay in business and were warning that higher FDIC taxes will mean less money available to lend to customers, The Washington Post reported.

Especially targeted by the FDIC board were the largest U.S. banks with at least $100 billion in assets, which will have to pay about $500 million more than was previously planned.

FDIC Director Sheila Bair said it was fair to hit the biggest banks with higher assessments because "over the past 18 months, large banks, as a group, have posed much greater risks to the banking system than small banks have," the Post reported.

Comptroller of the Currency John Dugan argued against raising the FDIC assessments, saying hitting larger banks was "frankly perverse" because the insurance fund was being tapped mostly because of the failures of dozens of smaller banks, the newspaper said.

© 2009 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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