Banks close to blocking boost in FDIC premiums

May 12, 1992|By New York Times News Service

WASHINGTON -- On the eve of a pivotal regulatory vote for the banking industry, bankers and Bush administration officials xTC said yesterday that they were close to victory in their drive to block any increase in the premiums banks pay to the deposit insurance fund.

Bank representatives who have met with the five members of the board of the Federal Deposit Insurance Corp. in anticipation of today's decision said yesterday that they had at least two votes to put off a premium increase and thought that they would be able to win over a swing vote.

The insurance fund says it has a deficit, and Congress and some regulators believe it must be buttressed with additional funds. But bankers argue that a premium increase would weaken their industry just as it has begun to recover, and the administration says any premium increase will ripple through the economy and slow down growth.

Premiums, now 23 cents for every $100 in deposits, are ultimately paid by stockholders, who would get lower returns if premiums were raised, and bank customers, who would pay higher fees and receive lower yields. They are also borne to some extent by taxpayers, since banks can write off a percentage on their corporate taxes.

After intense lobbying by the industry and the administration, the FDIC, which had said last year that it would consider an increase in 1992, decided last month to postpone any increase until Jan. 1.

The vote today will be on a proposal to raise premiums, probably by 2 cents to 7 cents for every $100 in deposits, starting in 1993.

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