Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 9, 1991 TAG: 9102090125
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Federal Deposit Insurance Corp. fund, hard hit by more than 1,000 bank failures over the past six years, slipped to $8.5 billion at the end of 1990 and could run out of money by the end of this year, according to government projections.
Under a plan negotiated at a bankers' "summit" on Thursday, banks would replenish the fund by voluntarily purchasing bonds issued by the FDIC.
The bonds would be repaid over a long term, perhaps 20 or 30 years, by a special premium paid by banks, the sources said. It would be five cents or six cents per $100 of assets.
Staff members of the trade associations were to draft the plan over the weekend. It still must be ratified by the trade groups' elected leadership. The goal is to formally make it public early next week.
The regular premium now paid by banks, 19.5 cents per $100 of deposits, would be frozen, the sources said, although the special premium could be raised later if it turned out the FDIC needed to borrow more than $10 billion.
Officials of both the FDIC and the Treasury Department have indicated they would accept a replenishment plan, provided it raised enough money and had the united backing of the industry.
Another provision of the tentative pact would provide around $2 billion for an "early intervention" program to save weak banks before they fail. This money would come from bank reserves now held by the Federal Reserve.
The trade groups also tentatively agreed to oppose the Treasury Department's plan to limit depositors to $200,000 in deposit insurance per institution: $100,000 for retirement accounts and $100,000 for other accounts. Current rules allow families to insure more than $1 million by using a combination of trust and joint accounts.
by CNB