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Wonder how may banks will go under because of the special assessment.
WASHINGTON — Declaring the decline in its insurance fund to be an emergency, the Federal Deposit Insurance Corporation board imposed an historic one-time $15 billion increase in insurance fees that will be collected from the nation’s banks.
When combined with a longer term fee increase that was also approved by the board, the new fees would mean that banks must pony up $27 billion to replenish the insurance fund this year, compared with $3 billion last year, a jump that is certain to draw protests.
F.D.I.C. officials said Friday morning that such a drastic step was necessary because the insurance fund — with the surging number of bank failures in the last year — has dropped below a legally mandated minimum.
The agency, which insures deposits at 8,300 banks, now estimates it will lose $80 billion from 2008 to 2013 as a result of bank failures, double the losses estimated in the fall.
Already this year, 14 banks have failed, compared with 25 last year and 3 in 2007. The F.D.I.C. announced Thursday that 252 banks are on a special watch list of problem institutions, leading banking industry analysts to predict there will be at least 100 bank failures this year.
The F.D.I.C. insurance fund, as of December, had a $19 billion balance, not including $22 billion already set aside for anticipated bank failures this year. The special assessment and increase in rates are intended to ensure that the fund has enough money in 2010 to cover additional bank failures.
The F.D.I.C. has once before imposed a special assessment — in 1996 — but it was only for a narrow number of banks covered by a special insurance fund that no longer exists.
Banks will certainly protest the plan, as it demands they pay more just at the time they are suffering through the recession.
The details of the new rate plan were first released Friday morning.
When combined with a longer term fee increase that was also approved by the board, the new fees would mean that banks must pony up $27 billion to replenish the insurance fund this year, compared with $3 billion last year, a jump that is certain to draw protests.
F.D.I.C. officials said Friday morning that such a drastic step was necessary because the insurance fund — with the surging number of bank failures in the last year — has dropped below a legally mandated minimum.
The agency, which insures deposits at 8,300 banks, now estimates it will lose $80 billion from 2008 to 2013 as a result of bank failures, double the losses estimated in the fall.
Already this year, 14 banks have failed, compared with 25 last year and 3 in 2007. The F.D.I.C. announced Thursday that 252 banks are on a special watch list of problem institutions, leading banking industry analysts to predict there will be at least 100 bank failures this year.
The F.D.I.C. insurance fund, as of December, had a $19 billion balance, not including $22 billion already set aside for anticipated bank failures this year. The special assessment and increase in rates are intended to ensure that the fund has enough money in 2010 to cover additional bank failures.
The F.D.I.C. has once before imposed a special assessment — in 1996 — but it was only for a narrow number of banks covered by a special insurance fund that no longer exists.
Banks will certainly protest the plan, as it demands they pay more just at the time they are suffering through the recession.
The details of the new rate plan were first released Friday morning.
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