Tuesday, September 29, 2009

FDIC looking weaker and weaker 
I wrote earlier this year that the FDIC promise is paper thin.

It's getting thinner.

The Federal Deposit Insurance Corp. may take the unprecedented step of ordering banks to prepay about $36 billion in premiums to replenish the deposit insurance fund that has been severely depleted by a rash of bank failures.
The FDIC board likely will call for "prepaid" bank insurance premiums at its public meeting Tuesday to discuss the issue, three industry executives and a government official said. The banking industry prefers that option over a special emergency fee — which would be the second this year. The executives and the official spoke on condition of anonymity because the decision has yet to be made public.

It would be the first time the FDIC has required prepaid insurance fees. Under the plan, banks would have to pay in advance their insurance premiums for 2010-2012, bringing in about $12 billion for each of the three years, two of the executives said. That is the normal amount of insurance fees, though it could vary somewhat according to growth in total insured deposits — the basis for determining the fees.

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