Two FDIC Funds? Big vs. Small? Posted by AVCU on 11:59 AM

Alex J. Pollock, previous president and chief executive of the Federal Home Loan Bank of Chicago and now a resident fellow at the American Enterprise Institute, writes in today’s American Banker that the Dodd-Frank regulatory expansion, recently passed by the House and awaiting Senate action, has added a new last-minute theory . . . .charge different banks different deposit insurance premium rates, not according to risk, but by asset size. House rules required the House/Senate conference committee to come up with the means to pay for the estimated $19 billion to implement the regulatory reforms put forth in the bill. Part of the means to do so comes from increased FDIC insurance premiums on banks over $10 billion in assets. That’s 1% of the nation’s banks. Pollock postures that the political motivation for this approach is to appease 99% of the nation’s banks and their trade association so that they don’t complain to legislators. Meanwhile, however, is f you have to keep two sets of books, one for large banks and one for smaller banks, you in effect have two separate funds, so Pollack suggests carrying the idea through by having two separate funds. See the full article here.