FDIC Premiums Could Shift to Assets From Deposits

The Senate voted 98-0 to change the assessment base of the Federal Deposit Insurance Corp. from deposits to assets, which could result in mega banks paying a greater share of the premiums for deposit insurance. The amendment sponsored by Senators Jon Tester, D-Mont., and Kay Hutchinson, R-Tex., bases FDIC assessments on a bank's total assets minus tangible capital. The Independent Community Bankers of America, which supports the Tester/Hutchinson amendment, estimates that 136 or 1.7% of the largest FDIC-insured institutions will pay more in assessments. Meanwhile, 7,794 banks and thrifts with less than $10 billion in assets will pay less-94% will save at least 20% on their premiums and 67% will save at least 30%. "The Tester/Hutchinson amendment recognizes the difference between Main Street and Wall Street by ensuring mega banks pay their fair share for the risk they pose to the FDIC Deposit Insurance Fund, and ultimately our entire financial system," said ICBA chairman Jim MacPhee. The FDIC assessment bill is now attached to the financial services regulatory reform bill, which is currently going through the amendment process on the Senate floor.