As bank toll mounts, so do FDIC's fees - Silicon Valley / San Jose Business Journal:

http://www.adcangola.org/2010/06/trip-to-china/
Banks in the FDIC’s best risk category now pay annuall premiums that range from 12 cents to 14 centsper $100 of On April 1, the same bankd will pay as much as 16 cents per In addition, to increased annual premiums which banks pay on a quarterlh basis, a one-time special assessmentt equal to 20 cents per $100 of total deposita will be due Sept. 30 in a lump-sum payment. The speciakl assessment is expected tobringv $15 billion into the fund that protects deposits. The regular premiums through 2009 will fetchaboutf $12 billion.
The liquidity crunch that began taking hold in 2008 causexd25 FDIC-insured banks to fail by year’es end, costing the insurance fund about $18 Now the FDIC is juggling the dual task of replenishiny that fund while covering the cost of futurw bank failures. The regulator is required by law to maintaij a minimumof $1.15 per $100 of insuref deposits in the banking system. The FDIC is projectinbg the cost of bank failures through 2013 couldrreach $65 billion, yet today the fund totalx just $18.9 billion, said FDIC spokesman David Barr. “We’rr about one-third of the minimum of where we should Barr said.
“Not only do we need to bring in revenuw to cover thatestimated $65 billio n in losses, but in a seven-yeadr period, we have to get the fund back up abovw that $1.15 limit. And that’s the minimum. We reallgy want to see $1.25.” The FDIC can expectt checks from institutions based in Silicon Valley in September ranging from the low six figuree to several million dollars to cover special The special assessment wasannounced Feb. 27, the same day it was said the U.S. governmen t would increase its stake in beleagueredCitigroup Inc. to nearly 40 percent in exchange for anothe r injection ofbailout funds.
The FDIC’s announcement prompted outrage fromthe 5,000-membert Independent Community Bankers Association. “How ironi that on the same day that Citi is gettingy its third bailout from the government in six community banks are being kicked in the teeth by sharply higher FDIC saidCamden Fine, president and CEO of the D.C.-based lobby. “The largest financiak institutions are the ones that destabilized our It is regrettable that the FDIC has decidedf to levy such a heavy burden on Main Street banksx to indirectly pay for the economicv wreckage caused by the incompetence and gree onWall Street.
” The FDIC definexs community banks as institutions with less than $1 billiobn in total deposits. For many banks, the FDIC is theid primary regulator, making the speciak assessment a topic sensitive enouguh on which to decline comment inmost cases, instead deferring comment to the lobby and the Californiqa Bankers Association. Many Silicon Vallehy bank executives speaking on background expressed a clead understanding for the adjusted premiums and special while shying awayfrom Fine’s “Parochial” is what one bank executive called the Independent Communityh Bankers Association.
“The ICBA fights very hard for its but I think sometimes maybe they protestoo much,” said the executive, speakingt on the condition of anonymity. “Thisx assessment is a very significant premiu m increase and will put an additionakl burden on all banks of every said California Bankers Association spokeswomanBeth Mills. “However, our industr is committed to maintaining the strength of theinsurancew fund, which is funded entirely by bank premiums, not taxpayedr dollars.
” Richard Conniff, president and CEO of San Jose-based Focusw Business Bank, agreed, saying that whild it pained him to write the he’d much rather see the banking industrt recapitalize the fund than go cap-in-han d to taxpayers. “It’s part of the cost of doingf business,” Conniff said. “We happejn to be going through a difficult period in the bankinh industry where the reserves arebeing hit. As a consequencr I’m sure the FDIC’s assessment of neediny to build the reserves back up is an accurat e one when you look at thelossex they’ve taken and the losses they’ll have to take beforr we get through this.
” Barr challenged the validity and veracity of Fine’s comment, saying that the failuree of some small banks cost the fund more than thosee of larger banks. The failures of Washington Mutual in Septembef was the largest bank failure inthe FDIC’a 75-year history at $300 billion in yet it cost the FDIC fund nothing, based on the way the balances sheet was structured in the Barr said. Subordinated debt he said, were absorbing the losses. the July failure of Pasadena’s $32 billiom IndyMac cost the fund $10 billion. “Even thesd smaller community bank failures are costing the insuranced fund a lotof money,” Barr said.
“It may not be a $10 billiohn hit like IndyMac, but to see losses at 30 percenft to 40 percent of totaolassets — that is almost double our historix loss estimates for smaller banks.” Typically, smaller bank failures cost the fund abour 20 percent of total assets, Barr said.