|FDIC chairwoman Sheila Bair says borrowing from the Treasury is an option.|
FDIC expected to ask banks to prepay $36b in fees
WASHINGTON - The Federal Deposit Insurance Corp. may take the unprecedented step of ordering banks to prepay about $36 billion in premiums to replenish the deposit insurance fund that has been severely depleted by a rash of bank failures.
The FDIC board will probably call for “prepaid’’ bank insurance premiums at its public meeting today to discuss the issue, three industry executives and a government official said. The banking industry prefers that option over a special emergency fee - which would be the second this year. The executives and the official spoke on condition of anonymity because the decision has yet to be made public.
It would be the first time the FDIC has required prepaid insurance fees. Under the plan, banks would have to pay their insurance premiums for 2010-2012 in advance, bringing in about $12 billion for each of the three years, two of the executives said.
That is the normal amount of insurance fees, though it could vary somewhat according to growth in total insured deposits - the basis for determining the fees.
Off the table, at least for now, are the options of tapping the agency’s $500 billion credit line with the Treasury Department and the agency borrowing billions of dollars from healthy banks by issuing its own debt, the industry executives and the government official said.
A spokesman for the FDIC declined to comment yesterday.
FDIC chairwoman Sheila Bair said earlier this month that she was “considering all options, including borrowing from Treasury,’’ to replenish the insurance fund. Yet she is generally perceived as considering that the most unpalatable approach.
Borrowing from the Treasury could create the undesirable impression of another taxpayer-financed bailout, while borrowing from the banks might make the FDIC look as if it were beholden to the banking industry, experts say.
Losses on commercial real estate and other soured loans have caused 95 bank failures so far this year amid the most severe financial climate in decades.