Alan R. Tubbs, president of the American Bankers Association, says the deposit insurer does not need to increase insurance premiums as proposed under a plan by the Federal Deposit Insurance Corp.
Mr. Tubbs, also president of the Maquoketa State Bank in Iowa, said the industry's improved strength casts doubt on the need for higher deposit insurance premiums.
According to the FDIC, he said, banks earned $15.7 billion in the first half of 1992. The industry earned $18 billion in 1991.
The FDIC has proposed a risk-based premium system under which the cost of deposit insurance would vary depending on a bank's risk to the FDIC's Bank Insurance Fund.
The bankers group says the average premium rate would be raised to 28 cents per $100 of insured deposits from the current 23 cents per $100 of insured deposits. The FDIC may vote today on an alternate plan raising the premium to 27 cents per $100 of insured deposits. The group said each one-cent increase in premiums costs the banking industry $235 million every year.
"When we add up all the facts, we must conclude that the need for an increase in premiums has not been demonstrated," Mr. Tubbs said. "They show an industry making steady gains and meeting its obligations."
