Litigation

Banks Assessed Emergency Fee by FDIC To Replenish Reserves

By John Darer

Bloomberg reports that U.S. banks will pay an emergency fee based on their assets to rebuild the Federal Deposit Insurance Corp.?s reserves, putting a greater burden on large banks to replenish the fund amid the fastest pace of failures in 15 years.

The FDIC voted to impose a fee of 5 cents per $100 of assets, excluding Tier 1 capital, significantly less than an an original proposal of 20 cents per $100 of insured deposits which community banks indicated would decimate their 2009 earnings. The FDIC estimates it will raise $5.6 billion, lifting the fund from its lowest level since early 1994.

FDIC Chair Woman Sheila Bair was quoted ?We have tried to strike the right balance between keeping the assessment low enough so that we do not unduly burden anyone in any capacity. We have struck upon a rule that is equitable.?

Similar types of assessments and corollary insurer concerns could arise in the event of the failure of a big insurance company or companies. That being said thus far no major life insurer has become impaired to the extent that such moves have become necessary.

Full post as published by Structured Settlements 4Real on May 22, 2009 (boomark / email).