FDIC to make banks pay more for deposit insurance

The Federal Deposit Insurance Corp. will raise the amount it charges banks for deposit insurance by 7 cents for every $100 in deposits.

The increase, to be charged annually, will take effect Jan. 1.

Banks now pay between 5 and 43 basis points for FDIC insurance, depending on the strength of the bank.

Under the new rules, insurance rates will be risk-based between 12 and 50 basis points.

Most banks will pay between 12 and 14 basis points for insurance, according to an FDIC release.

Bank failures have cost the FDIC’s insurance fund millions of dollars, and the fund has fallen below its reserve ratio target of 1.15 percent. The changes made Wednesday will get the reserve ratio to its required level by 2013, the FDIC says.

“With higher levels of bank failures, the FDIC’s resolution costs have increased significantly,” says Sheila Bair, FDIC chairwoman. “This assessment increase creates a path for the fund to return to its statutorily mandated level.

“The banking system is the bedrock of our economy, and deposit insurance has played a vital role in providing stability to the system,” she adds. “Maintaining a strong fund positions the FDIC well to handle future challenges.”

http://www.bizjournals.com/triangle/stories/2008/12/15/daily33.html

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FDIC to make banks pay more for deposit insurance