SAN DIEGO -- Banks passing deposit-insurance premiums on to retail customers risk a congressional backlash that could result in another layer of regulation, a Federal Reserve official said.

Leonard N. Chanin, managing counsel, warned of a repeat of the Truth-in-Savings Act of 1991, which cracked down on an increasingly widespread pricing practice. Congress prohibited banks from basing interest calculations on "investable balances," which excluded funds that had to be set aside as reserves.

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The FDIC fee "is very close to the investable balance, in terms of consumer perceptions," Mr. Chanin told bankers at the American Bankers Association's national regulatory compliance conference. "You're taking a percentage of the balance, and you're deducting a fee based on something you have to pay to a government entity."

Mr. Chanin would not name any banks charging a retail FDIC fee, but did say that some in the South are doing so - and consumer groups are complaining.

He advised the bankers to Pressure competitors to end the practice before the whole industry pays a price.

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