Federal Deposit Insurance Corp. Chairman Sheila Bair said last week that borrowing from banks is not "a preferred option" to replenish the FDIC's dwindling reserves.

Bair, whose agency meets Tuesday to discuss how to bolster its reserves, indicated during a panel discussion at the Clinton Global Initiative conference in New York Friday that charging another special assessment on banks is still on the table.

"There is some discipline to be gained by continuing to press the industry to support the Deposit Insurance Fund," she said. "In terms of containing risk going forward, it is good for the industry to absorb and deal with the losses that we are having to assume now as a result of bank closings which came from things like too much commercial real estate concentration and unaffordable mortgage loans being made."

Bair said the FDIC will consider a "variety of options" to strengthen its "cash resources," including taking loans from banks.

"We do have the authority to issue debt to banks," she said. "It's there; it's a possibility, I assume. I really don't see that as a preferred option."

One of Bair's co-panelists, James Dimon, the chief executive of JPMorgan Chase & Co., said he is willing to lend to the FDIC.

"I just want you to know that JPMorgan thinks that the FDIC is a good credit and we're perfectly happy lending money when you need some," Dimon said.

Bair has said previously that the FDIC could tap its credit line with the Treasury Department or levy another assessment on banks and thrifts, an option that is unpopular with banks and lawmakers. The Deposit Insurance Fund has slipped to roughly $10 billion from $45 billion over the past year.

Bair said her agency got "a lot of resistance" when it tried to crack down on banks that took on too many brokered deposits or made too many commercial mortgage loans. She hoped the agency would get "better support" from banks in the future because "it is costing them money" in the form of failing banks.

Bair and Dimon both said reforming how regulators deal with banks that are dubbed "too big to fail" should be at the top of lawmakers' agenda.

"It would be a very bad long-term policy error to have banks that are 'too big to fail,' " Dimon said. "By that I don't mean make the banks smaller. You don't mind if a company fails. You mind if a company fails and it destroys your economic life."

Dimon advocated a simpler, stronger regulatory system that gives key overseers the authority to "facilitate a failure of a large institution in a way that didn't damage everybody else."

While Bair agreed that the resolution process for failed banks needs updating, she warned lawmakers to tread carefully and said banks also need to do their part.

Bair said she hoped the crisis spurred more banks to take fewer risks and to return to the basic business of taking deposits and making loans. She also said the last thing the industry needs is another layer of bureaucracy.

"We need effective regulation," Bair said. "It needs to be simpler and less complicated."

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