Fallout: The Financial Crisis

FDIC may double bank assessment fees

Janet Babin Dec 16, 2008
HTML EMBED:
COPY
Fallout: The Financial Crisis

FDIC may double bank assessment fees

Janet Babin Dec 16, 2008
HTML EMBED:
COPY

TEXT OF STORY

Steve Chiotakis: There’s a meeting today of the FDIC board, the Federal Deposit Insurance Corporation. You know the FDIC as the safety net that covers your bank deposit up to $250,000. But your bank has to pay to be able to show that little sticker in the window. And the amount it shells out has to do with its assets. From North Carolina Public Radio, Marketplace’s Janet Babin reports.


Janet Babin: By law, the FDIC is supposed to keep a minimum of 1.15 percent of insured deposits in reserve. Yea, um, they don’t have that right now. So to get there, The FDIC will likely double bank assessment fees at today’s meeting. Bank customers aren’t told how much, but the exact amount each bank pays the FDIC depends on how risky its assets are.

Professor Lissa Broome at the University of North Carolina says because of the financial crisis, highly leveraged banks will pay more than ever before:

Lissa Broome: I think the range will spread out so that there is more room to reward safe banks, and more room to charge the banks that pose more risk.

The more cash and government securities on the bank’s balance sheet, the less the FDIC payment, and the less cost passed on to customers.

I’m Janet Babin for Marketplace.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.