Banks unlucky enough to receive a missent payment on the last day of a quarter get stuck paying deposit insurance premiums on a bigger base.
Dan Taylor, president of the U.S. Council on International Banking in New York, thinks it's time for the Federal Deposit Insurance Corp. to fix this. "If you end up with $100 million on June 30 that isn't yours, you have to pay the assessment," he said. "We think they [the FDIC] should get what they are entitled to - no more, no less."
FDIC officials agree that it's not fair to stick the bloated bill with a bank that was incorrectly sent a payment by another institution. But the agency has not come up with a solution yet.
Banks often send money to one another for foreign exchange settlements or corporate funds transfers, among other things. The problem deepens when an uninsured institution is involved, because these companies do not always adhere to the unofficial honor system commercial banks use to pay each other back.
The council, composed of 370 U.S. and foreign banks, has been pushing the FDIC since 1992 to issue rules on refunds for premiums charged because of missent payments.
Any guidance on this issue is likely to be part of the FDICs general reworking of the assessment process, said Steve Black, deputy director in the FDIC's finance division.
"Yes, it's a problem," Mr. Black said. "But we're not sure what the solution is. We want the base to be fair and equal but its not something we can willy-nilly change the rules on."
In May, the council proposed that the FDIC issue refunds when the wrong bank ends up shelling out the assessment money.
The FDIC is considering the refund proposal, Mr. Black said.
Originally, the council asked the agency to allow banks to lower their assessments when a missent payment was part of the base. But the FDIC said that would be too difficult to monitor, Mr. Taylor said.
An advanced notice of proposed rulemaking on ways to overhaul the assessment base will be out by September. Allan Long, assistant director in the FDIC's finance division, said the refund issue may be addressed in that proposal.
Mr. Black encouraged bankers to help the FDIC find a way to rectify this problem.
