WASHINGTON – The FDIC yesterday passed a rule that will require banks to prepay three years of special assessments, a total of $45 billion, to pay for the growing number of bank failures.
The action satisfies the deposit fund’s "need for liquidity without imposing undue burden on the industry," said FDIC Chairman Sheila Bair, who has shuttered 120 banks so far this year.
NCUA, which recently charged credit unions a $1.1 billion assessment to pay for growing credit union losses, said yesterday it has no plans to adopt a prepayment plan, even as it has said in the past it expects to charge additional assessments in the next few years.
"NCUA is not considering a prepaid approach. The current mechanism for funding the NCUSIF is adequate," said John McKechnie, chief spokesman for the agency.
FDIC-insured banks will pay their premiums for the fourth quarter and the next three years on Dec. 30. Banks can seek an exemption "if the prepayment would significantly impair the institution’s liquidity, or otherwise create extraordinary hardship," according to a summary of the final rule.
Banks supported prepayment because premiums are classified as an asset until the quarter when the obligation is due, when they are recorded as expenses. Banks have paid premiums quarterly.
The FDIC staff rejected options such as tapping a $100 billion line of credit with the Treasury Department, charging banks a special fee in addition to the levies they already pay or borrowing directly from banks.
The banking industry had opposed a special fee that would be added to the regular premiums, telling the FDIC and Congress such a levy would hurt their ability to raise capital.
