FDIC Delays Increase in Fee For Insurance --- Agency Plans to Restructure Its Premiums to Account For A Bank's Condition
WASHINGTON -- The Federal Deposit Insurance Corp. postponed for six months an increase in the premium banks and thrifts pay for deposit insurance and said that it will design a system that requires weak banks to pay higher premiums than strong banks.</br></br>The delay until Jan. 1, 1993, is a huge victory for banks. They have argued that a premium increase isn't necessary to rebuild the bankrupt Bank Insurance Fund and that higher fees now would hurt bank profits, cramp lending and slow the economic recovery. Several members of the Federal Reserve Board have also said that this is the wrong time for a large premium increase.</br></br>Rep. Henry Gonzalez (D., Texas), chairman of the House Banking Committee, charged that "deferral of the increases until next January provides a politically attractive means of reducing costs to banks and eliminating the politically unattractive spectacle of closing banks during an election year."</br></br>But FDIC Chairman William Taylor said in his announcement that the agency was postponing the premium increase and restructuring the insurance fees to rise with an institution's probability of failure because "the current flat rate system places an unfair burden on well-managed banks." This is one of the points the banking industry has been making in a recent campaign against a premium increase.</br></br>Each one-cent increase in the premium costs the nation's 12,500 banks about $250 million annually. The FDIC last raised premiums July 1, 1991, by 3.5 cents.