Responding to complaints from bankers and regulators, the Federal Deposit Insurance Corp. has decided to revise and delay until next year a plan to make more institutions pay for deposit insurance.
Agency officials previously said the proposal-aimed at well-capitalized but risky "outliers"-could be adopted as early as May.
That schedule would have affected insurance premiums for the second half of this year. But negative feedback has driven the FDIC to change course.
Agency officials said that the revised plan would use call report statistics, not Camels ratings, to identify risky institutions. It would also let a flagged bank or thrift repair problems before being bumped into a higher premium category.
However, no final decision has been made. "None of this is a done deal," said Arthur J. Murton, director of the FDIC's insurance division.
In September, FDIC Chairman Donna A. Tanoue said in a speech that more banks and thrifts should be paying premiums, and she announced a plan to target the riskiest ones.
The agency initially planned to focus on well-capitalized institutions with overall supervisory ratings of 1 or 2-the two best grades-but a management or asset quality rating of 3, 4, or 5.
Nearly 600 banks and thrifts would have been caught in this preliminary screen. The FDIC proposed to further whittle the group by reviewing exam reports, off-site surveillance models, and call report data.
The FDIC asked industry trade groups, as well as other regulatory agencies, for feedback. Industry representatives criticized the plan for relying too much on examiner opinion and for denying outliers a chance to correct their mistakes.
So the FDIC went back to the drawing board.
Instead of using Camels data as an initial screen, the insurance division is focusing on call report statistics, including asset growth, asset concentration, loan yields, and changes in an institution's business mix.
A bank with two or more abnormal statistics would be flagged for further review.
One advantage of using call report data is that the reports are filed quarterly. Camels ratings, by contrast, are based on the most recent examination and can be as much as 18 months old.
Mr. Murton said it is impossible to estimate how many banks and thrifts would be caught by the call report screen because statistical thresholds of abnormality have not yet been established.
"We're still talking about a small percentage of the industry," he said. But "you see some of that today in the subprime" banking market.
As a second filter, a bank's examiners would be asked whether they have observed trends that corroborate the problems indicated by call report statistics. They could call the institution for more current information.
If the examiner found no corroborating evidence, the bank's cost of insurance would not change. If the examiner did, the FDIC would contact the bank, explain the problems discovered, and give the institution an opportunity to fix them.
Banks forced to pay a higher premium for deposit insurance could file an appeal.
"This isn't really so much about getting more money in the" insurance fund, Mr. Murton said. "It's more about moderating some of the risk-taking behavior of some of these banks that are atypical."
The changes being discussed would not affect the FDIC board's ability to adjust the nine rates it charges for deposit insurance, and no change is expected in the current range of 0 to 27 cents per $100 of insured deposits.
