WASHINGTON — Big U.S. banks would bear a larger part of the burden
of replenishing the Federal Deposit Insurance Corps deposit insurance
fund under a proposal being considered by the agency, according to a
source familiar with the plans.


The FDIC in February proposed to charge the industry a special
one-time fee of 20 basis points on banksdomestic deposits, in an
attempt to build up the agencys dwindling deposit insurance fund. That
fee would have amounted to $200,000 per $100 million of domestic
deposits and would have brought $15 billion into the agency.


In a change, the FDIC is considering reducing the emergency fee
to 5 or 6 basis points and then assessing bankstotal assets, instead
of deposits, the source said, speaking anonymously because the agency
talks are private.


Smaller banks, whose deposits frequently make up a huge
percentage of their assets, would get a significant break on the fee.
Larger banks with more diversified operations would have to foot a
greater part of the bill.


"I appreciate the move tremendously, but the reality is it
doesn’t give us a break, as much as it more equitably charges the
larger organizations," said Kevin Kutcher, Chief Executive of Liberty
Bell Bank in Cherry Hill, New Jersey, which has about $160 million of
assets and four branches in New Jersey.


Wayne Abernathy, an executive at the American Bankers
Association, said insured deposits often make up less than 50 percent
of the funding on larger banksbalance sheets. For smaller banks, that
percentage can reach as much as 90 percent, he said.


The assessment will be the subject of an FDIC board meeting on Friday. The FDIC declined to comment.


Banks have continually complained to regulators that the fee would hit their bottom line at a time they can least afford it.


But FDIC Chairman Sheila Bair said the agency has been left with
few options, as a significant upswing in bank failures has been
draining the fund used to back bank deposits.


The fund took a big hit during the fourth quarter, plunging
almost 50 percent to $18.9 billion in preparation for actual and
expected bank failures.


The FDIC has said it would reduce the emergency assessment if
Congress approved legislation that would triple its borrowing authority
with the U.S. Treasury Department to $100 billion. The agency is hoping
that will happen in the coming days.


The special assessment would be the first since 1996, when
regulators took similar action in the aftermath of the savings and loan


The shift to fees based on assets instead of deposits comes as
the FDIC is seeking the power to charge bank holding companies, instead
of just insured depository banks.


Arthur Murton, the FDIC director of insurance and research, told
a Senate subcommittee in March that the agency is currently hindered in
its ability to target its fees toward the biggest institutions, such as
bank holding companies supervised by other federal regulators.


"The FDIC realizes that these assessments are a significant
expense, particularly during a financial crisis and recession when bank
earnings are under pressure," Murton told lawmakers.

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