WASHINGTON (Reuters) â U.S. bank regulators are expected to propose on Tuesday that banks prepay three years of regular assessments to replenish the dwindling deposit insurance fund, according to a source familiar with the matter. Such an option would give the Federal Deposit Insurance Corp more liquidity to deal with the sharp increase in bank failures, while banks would not be required to report the expense of the fees until they would normally be due. The source, speaking anonymously because the regulator discussions have been private, said the FDIC would likely propose for the banking industry to prepay $12 billion per year in assessments, for a total of $36 billion. The board of the FDIC is meeting on Tuesday to propose alternatives to charging the banking industry hefty emergency fees to avoid having the balance of the insurance fund hit zero. The industry has said such upfront fees could hurt banks just as their balance sheets are starting to recover from the recent financial crisis. FDIC Chairman Sheila Bair has said the agency is considering alternatives to the upfront "emergency" fees, including prepayments of regular assessments, tapping the FDIC's $500 billion line of credit with Treasury, and borrowing from healthier banks to rebuild the fund. It is unclear what combination of options the FDIC board will propose to put out for public comment on Tuesday, as it seems regulators have narrowed the menu of options. An FDIC spokesman declined to comment. The source said the total amount of prepaid assessments could reach higher than $36 billion if the FDIC decides to ask the bank industry to also prepay special assessments. The FDIC is exploring ways to replenish the insurance fund that safeguards bank deposits after a sharp increase of bank failures has been draining the fund. So far this year 95 U.S. banks have failed, compared with 25 last year and only three in 2007. Those failures have whittled the balance of the insurance fund down to $10.4 billion at the end of the second quarter from $45 billion a year earlier. The FDIC notes it has an additional $32 billion in reserves to handle failures over the next year. http://news.yahoo.com/s/nm/20090928/bs_nm/us_financial_regulation_fdic The banks collect it from the "customer / taxpayer", move it to the FDIC which in turn "insures" failed banks. Funny cycle, isn't it ? Good to know where your higher credit card charges, overdraft fees and late payment fees end up...
Cash for Clunkers Gone Wild. I guess the updated version of Roosevelt's gold confiscation is the next step. Wouldn't put it past these debt-addicts to legislate an overnight robbery of 33% of everyone's assets; cash, stock, funds, IRA, 401K, and everything else...
So, the government can give bailout money to GM, AIG, and others... but can't shore-up the FDIC? Why is that? Because "the people" are not important as a whole? Only the "favored" and "buddies" of government get such special benefits?
FDIC bank failure losses to hit $100 bln by 2013 FDIC says prepayments would raise about $45 bln FDIC seeks prepayments from banks through 2012
******NEWSFLASH*******FOR IMMEDIATE RELEASE******* RDT NEWS-PYRE, (read it and burn) (FrontRange, CO) Strait Arm Insurance Company, the nations largest life and property and casualty insurance company, by assets, liabilities, and policyholders, today announced that on the heels on the FDIC proposal to assess banks the equivalent of three years of premiums, in advance, they too will be requiring all insurees to pre-pay three years worth of insurance premiums, in advance, effective for all policy types. A spokesperson for the insurance behemoth was quoted as saying, "Well, if the US Goverment is all-fired anxious to amass as much premia pre-pay as-quick-as-a-cat, we figgered we better get to the trough as rapid-fire as we can, while the gettin is good. before its all gone.'