The Federal Deposit Insurance Corp. will meet Tuesday to discuss a much-awaited plan for bolstering its reserves.
Before last week, the agency was widely expected to charge another special assessment to prop up the Deposit Insurance Fund. The fund held just $10 billion at the end of last quarter, although the agency has an additional $32 billion in set-aside reserves.
But in public remarks Friday, Chairman Sheila Bair said all options were on the table — not just an assessment. Despite her previous unease about tapping the agency's Treasury Department credit line, Bair said that was an option, as well as issuing debt to institutions and having banks and thrifts prepay future assessments.
Though media speculation Tuesday morning focused on the FDIC borrowing funds from the industry, an agency spokesman said that option was "not something that's under serious consideration."
In a letter to Bair on Monday, American Bankers Association President Edward Yingling advocated an approach that would not hurt already-battered banks. The agency last quarter charged a special fee of 5 basis points per assets, minus capital.
"The preferred approach is one that would maximize the resources that will be available to meet the credit needs of our communities, while providing a long-term plan to support the FDIC fund," Yingling wrote.
