Bank of America, 3 Other Banks’ FDIC Fees May Top $10 Billion

[Joanne98]

Source: Bloomberg


Sept. 29 (Bloomberg) -- The Federal Deposit Insurance Corp.’s plan to bolster its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion.

Bank of America, the biggest U.S. lender by deposits, may owe $3.5 billion under the FDIC proposal for banks to prepay three years of premiums, based on the lowest assessment rate multiplied by the bank’s $900 billion in second-quarter U.S. deposits.

“This seems like a very hefty amount,” said Tim Yeager, a finance professor at the University of Arkansas and former economist at the Federal Reserve Bank of St. Louis. “The FDIC’s projections of future losses are pretty severe, and they are trying everything they can to avoid tapping the Treasury.”

U.S. bank premiums range from 12 cents per $100 in deposits for the safest lenders to 45 cents for banks the U.S. considers risky, said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America. The FDIC proposed asking banks to pay premiums for the fourth quarter and next three years on Dec. 30. The fees will raise $45 billion.

The FDIC is required by law to rebuild the fund when the reserve ratio, or the balance divided by insured deposits, falls below 1.15 percent. It was 0.22 percent on June 30 and will sink to a deficit tomorrow. The fund, drained by 95 bank failures this year, had $10.4 billion at the end of the second quarter. The fund will erase its deficit by 2012, the FDIC said today.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aaZTaeysFJPY

[bluestateguy]

1. If it wasn't for taxpayers BofA would be in liquidation right now

They should be very grateful, and shut their mouths and pay their fees.

[Sub Atomic]

4. When I lived in San Diego, there was an uproar because B of A was actively pushing home loans

for those in the country without legal authorization.

Bank of 'America' my ass. Unless you're presuming that 'America' is going to be your piggy bank.

[No Elephants]

12. Originally, Bank of America helped immigrants and those hurt by the 1906 earthquake in San

Fransisco. Such good beginnings. And look at it now. Changes in our antitrust and banking laws enabled this.

Too bad we couldn't make the relevant lawmakers and lobbyists financially responsible for the bailout, eh?

Instead, we pay them to enable our getting screwn.

[Vidar]

10. Where it should be.

[DJ13]

2. Many of the largest banks failed to pay anything to the FDIC for years

Zero

Nada

Zip

Its about time they stopped getting away with dodging their obligations.

[katkat]

3. DJ13

? I'm curious as to how banks have been avoiding paying the fees, can you explain what you mean?

[DJ13]

5. Now-needy FDIC collected little in premiums

Globe Staff / March 11, 2009

With fund going strong, banks didn't pay for decade


WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.

More....
http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/

[dixiegrrrrl]

6. In short, the FDIC is broke, and cannot afford to foreclose on broken banks.

If the oversight laws had been applied, and banks had been held accountable, this would not be an issue.
It is an issue now. I am amazed that people have not been taking their money out of the riskier banks.

[Po_d Mainiac]

7. U gotta be brain dead to do business with BofA-holes!

[hatrack]

8. Now I know I have a heart . . . .

'cause it's breaking!



:rofl: :rofl: :rofl:

[Turbineguy]

9. As long as it does not

cut into executive bonuses, who gives a shit?

[dmr]

11. All I can say is it's about damn time!

Why go at the lowest assessment rate? Why not somewhere in the middle?

Why not ALWAYS collect the premiums? If the money accumulates, then let it collect interest. Let it work for us instead of the big banks.