Sen. Carl Levin urged the Federal Deposit Insurance Corp. on Tuesday not to impose another special assessment on the industry.
In a letter to FDIC Chairman Sheila Bair, the Michigan Democrat said the agency should consider using its recently enlarged credit line with the Treasury Department rather than imposing more costs on community banks that did not cause the crisis.
"Adding yet another major financial obligation during this crisis could further deplete the capital of these small financial institutions, making it difficult for them to extend the credit needed to turn our economy around," Levin wrote.
With its insurance reserves declining, the FDIC in May said it would charge institutions a special premium on top of their normal assessments.
Levin echoed many others who have called on the FDIC to instead borrow Treasury funds to help stabilize the Deposit Insurance Fund. A law enacted in May increased that borrowing authority to $100 billion, from $30 billion.
In an interview on CNBC Tuesday, Bair said that she cannot say yet whether her agency will ask the Treasury for the assistance. The FDIC's board now is considering its funding options, she said, and will decide by Sept. 30. Asked whether a funding request may be made of Treasury, she answered, "I don't know," but added, "I never say 'never.' " However, Bair flatly rejected asking Congress for additional money.