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As Failures Mount, FDIC Asks Banks to Prepay

Regulator wants cash upfront through 2013 to avoid emergency credit line

By Jason Farago,  Newser Staff

Posted Sep 30, 2009 7:03 AM CDT
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(Newser) – The FDIC is set to ask banks to prepay three years of fees to replenish its coffers after a wave of bank failures, estimated to cost as much as $100 billion. Banks would be asked to prepay $45 billion of their quarterly assessments, but they wouldn't have to report the hit to their bottom line until the fees would normally be paid. The FDIC projects that its cash needs will outstrip liquid assets early next year.

The regulator is trying to avoid making "special assessments"—basically, demands for more money—on healthy banks, and it also doesn't want to hit up taxpayers by tapping into a $500 billion line of credit it has with the Treasury. "Everybody has bailout fatigue," FDIC chair Sheila Bair tells Reuters.

FDIC Chairwoman Sheila Bair, center, reads over documents as two officials from the Comptroller of the Currency talk to each other on Capitol Hill in Washington, Wednesday, Sept. 23, 2009.
FDIC Chairwoman Sheila Bair, center, reads over documents as two officials from the Comptroller of the Currency talk to each other on Capitol Hill in Washington, Wednesday, Sept. 23, 2009.   (AP Photo/Pablo Martinez Monsivais)
Jeanette Lawson, right, and others who lost their savings demonstrate Monday, July 13, 2009, on the one-year anniversary of the FDIC takeover of the IndyMac Bank in Irvine, Calf.
Jeanette Lawson, right, and others who lost their savings demonstrate Monday, July 13, 2009, on the one-year anniversary of the FDIC takeover of the IndyMac Bank in Irvine, Calf.   (AP Photo/Nick Ut)
Sheila Bair, chair of the FDIC, in her Washington office this August.
Sheila Bair, chair of the FDIC, in her Washington office this August.   (AP Photo/Ron Edmonds)
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COMMENTS
Showing 2 of 2 comments
0001tr
Sep 30, 2009 12:41 PM CDT
Did i read this right ? the Government is allowing the banks to do some "creative accounting " ??? IMAGINE !!!!
0001tr
Sep 30, 2009 1:24 AM CDT
wills...absolutely agree with you....BUT the issue at hand is...is the federal gov't allowing the banks to misrepresent their TRUE cash and assets, on hand to the public and stockholders...in order to protect the FDIC which like most GOV'T entities is Broke...our country's is being managed like the grandest PONZI scheme of all time..i can't even keep a check book , but i recognize a scheme when i see it..

 
FDIC • bank failure • financial crisis • Sheila Bair • regulator

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