The Deposit Insurance Fund got some breathing room last week. President Barack Obama signed the Helping Families Save Their Homes Act of 2009 into law, which increased the FDIC’s borrowing authority to $100 billion—with emergency funding up to $500 million—and extended from five to eight years the time required to rebuild the DIF. The law also leaves in place the higher $250,000 insurance coverage until the end of 2013.

This boost in borrowing power will allow the FDIC to “reduce the proposed special premium assessment on all banks,” said Floyd E. Stoner, executive director of congressional relations and public policy at the American Bankers Association, in a prepared statement. The extension of the DIF’s restoration deadline “gives banks adequate time to meet their obligation to maintain the health of the fund while also ensuring that they will have adequate resources to meet the lending needs of their communities,” Stoner added.

On Friday the FDIC voted 4 to 1 to levy a special assessment that would tap banks for 5 basis points on an expanded base of total assets less Tier 1 capital. The assessment will contribute around $5.6 billion to the DIF. The agency originally planned to set the assessment at 20 basis points, or more than $15 billion industry wide. ABA president and chief executive officer Edward L. Yingling called the reduction a “dramatic improvement” but still complained that the assessment “will make it more difficult to lend and harder to build capital through retained earnings.”

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