WASHINGTON – Prodded by the ongoing number of bank failures in 2009, it appears increasingly likely the Federal Deposit Insurance Corp. (FDIC) will assess its second special insurance premium to help bolster the fund.
In May, FDIC charged insured banks five cents for every $100 of assets minus Tier 1 capital, and indicated at that time another assessment might be charged. In the three months since, 43 banks, with $41 billion of assets, have collapsed, costing the Deposit Insurance Fund an estimated $8 billion, according to American Banker, an affiliate of Credit Union Journal.
The collapses have taken a toll on federal reserves, which stood at $13 billion on March 31, their lowest point since 1993. Observers said another special assessment will be needed to keep the fund from exhaustion.
“The size of the insurance fund is diminishing significantly, so I suspect that the good players are now going to be paying for the sins of the failures,” James Rockett, a co-chairman of the financial institutions group at Bingham McCutchen LLP, a law firm in San Francisco, told American Banker.
How much the FDIC would charge is debatable, but it would be partly based on the ratio of reserves to insured deposits. In late May, the last time the FDIC updated the figure, the reserve ratio stood at 0.27% – 88 basis points below its statutory minimum. An even clearer picture will come Aug. 27, when the FDIC is scheduled to give its second-quarter report on the banking industry's health.
If bank failures continue at this pace, they will top 100 for the first time since the savings and loan crisis. More than 70 banks have failed so far this year.
