WASHINGTON - Bank and thrift deposit insurance premiums - unchanged since the first quarter of 1996 - will remain the same for the second half of this year, the Federal Deposit Insurance Corp. decided Wednesday.
The agency said it will keep insurance fund assessments for both the Bank Insurance Fund and the Savings Association Insurance Fund at 0 to 27 basis points per year. More than 90% of FDIC-insured institutions currently pay nothing for insurance because they are sufficiently capitalized and well mananged.
Assessments will remain the same despite several unexpected and high-profile bank failures last year. The BIF lost $198 million in 1999, its first annual loss since 1991, and its balance declined to $29.4 billion, from $29.6 billion the year before. However, FDIC officials said it is too early to call last year's failures a trend.
The agency projected the BIF's yearend reserve ratio will fall between 1.27% and 1.42% of insured deposits and that the SAIF's yearend ratio should be between 1.44% and 1.53%. At the end of 1999, the BIF and SAIF ratios were 1.36% and 1.45%, respectively, well above the 1.25% required by law.
FDIC General Counsel William F. Kroener 3d admitted that banks and thrifts cannot be charged additional premiums to cover large and rapid deposit growth without federal legislation. FDIC Chairman Donna Tanoue recently said she is worried that a large influx of deposits would dilute the insurance funds' reserve ratios and is considering extra premiums as part of her deposit insurance reform plan.
"We have virtually no authority to deal with rapid deposit growth at an already existing institution," Mr. Kroener said.
