FDIC Seeks Fees to Shore Up Reserve
With banks failing faster than the government expected a few months ago, the federal agency that insures deposits on Tuesday called for a $45 billion cash infusion from the banking industry, seeking to raise additional funds needed to continue protecting deposits.
The Federal Deposit Insurance Corp. proposed that banks pay three-years worth of government fees by year’s end. Banks pay fees into the FDIC’s fund, which is used to protect depositors in case a bank fails.
The plan reflected the dire state of the banking industry even as the economy recovers. The FDIC increased its estimate on expected losses on bank failures over the next five years to $100 billion — $30 billion more than it projected just four months ago. Banks are still losing billions of dollars on troubled loans for homes and commercial real estate.
FDIC officials said that on Wednesday, the end of the third quarter, the fund is expected to go into the red, down from a $50 billion balance last year. Agency officials said it would be several weeks before they know exactly how low the fund would go.
In addition to the prepayment, the agency is also planning to increase its fees in 2011. Currently, banks pay 12 to 16 cents for every $100 they have on deposits. That would rise to 15 to 19 cents per $100.