WASHINGTON - Banks would start paying again for deposit insurance, if an independent consultant hired by federal regulators has its way.

In a paper released Tuesday, the New York firm Oliver, Wyman & Co. said the current system does not differentiate risk well enough, allows new and quick-growing institutions to get a free ride on the backs of banking companies that prepaid insurance in the early 1990s, and does not have enough of an analytical or market basis for setting prices. "Deposit insurance should be priced each year at least at the level of expected loss for every bank," said Andrew Kuritzkes, vice chairman of Oliver Wyman.

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