In Business This Week
THE FDIC HIKES ITS PREMIUMS--A TAD
Bowing to pressure from banks and the White House, the Federal Deposit Insurance Corp. cut in half a proposed rise in the insurance premiums banks pay on their deposits. Under the plan adopted Sept. 15, banks will pay an average 10% more in premiums, down from a proposed 22%, to shore up the deposit-insurance fund, depleted by hundreds of bank failures.
FDIC directors exempted roughly three-fourths of U.S. banks from the increase. The healthiest won't face any increase, while ailing institutions' premiums will rise to 31 cents per every $100 in deposits they hold, up from 23 cents. Congressional Democrats are worried that the exemption will hamper the FDIC's ability to repay the $70 billion loan to the fund that lawmakers approved last year.EDITED BY HARRIS COLLINGWOOD