WASHINGTON — Though the Federal Deposit Insurance Corp. said it would grant distressed institutions a waiver from a plan forcing all banks to prepay three years' worth of premiums, few are expected to get one, observers said.

Exactly how the FDIC will judge whether an institution needs an exemption is unclear. In its Sept. 29 proposal, the agency said only that it would grant waivers on a case-by-case basis "if the FDIC determines that the prepayment would adversely affect" a bank's safety and soundness.

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