The Federal Deposit Insurance Corp (FDIC) has signaled it is willing to lower its special assessment fee on U.S. banks to 10 basis points from 20 basis points, a bank industry group said Thursday.
The FDIC approved on Friday a one-time fee of $15 billion on the bank industry during the third quarter in an attempt to replenish its deposit insurance fund (DIF), which it said would have been wiped out this year if it did not increase fees.
"Lowering the special assessment from 20 basis points to 10 basis points is important, but the extra burden remains, especially when viewed in light of regular premium assessments that are substantially higher than they were less than a year ago," the American Bankers Association said in a statement.
The FDIC’s willingness to cut the fee comes as a powerful senator plans to introduce legislation that would more than triple to $100 billion the FDIC’s line of credit with the U.S. Treasury Department.
That provision to increase the FDIC’s credit line is currently tied up in House of Representatives legislation with an unpopular provision that would let federal judges erase mortgage debt for some homeowners who enter bankruptcy.
Senator Christopher Dodd, the Democratic chairman of the Senate Banking Committee, plans to introduce legislation in the Senate that would increase the FDIC’s line of credit in a stand-alone bill.
"The size of the special assessment reflected the FDIC’s responsibility to maintain adequate resources to cover unforeseen losses," FDIC Chairman Sheila Bair said in a letter to Dodd Thursday. "Increased borrowing authority, however, would give the FDIC flexibility to reduce the size of the recent special assessment."
An FDIC spokesman told Reuters the agency is willing to lower the special fee if Congress increases its line of credit with Treasury.
"Predicated on the passage of the legislation and an increase in our borrowing authority, we are open to providing a meaningful reduction in the special assessment," the spokesman said.
U.S. banks have balked at the 20 basis-point special assessment fee, which would equal a $200,000 fee for a bank with $100 million in domestic deposits.
The struggling bank industry has said the special fee comes at a time when the sector can least afford it.
Banks are already facing regular fee increases — in addition to the special assessment fee — to help replenish the insurance fund, which has been drained by an upswing in bank failures.
The fund took a big hit during the fourth quarter, plunging almost 50 percent to $18.9 billion as it set aside a large portion of money for actual and expected bank failures.
