Thrift Law's Fine Print Permits an Extra Fee for Moving out of SAIF
Rehm, Barbara A., American Banker
House Banking Committee Chairman Jim Leach wants to know more about the government's authority to charge banks and thrifts fees for switching deposit insurance funds.
The Iowa Republican - whose support is key to passage of any legislation shoring up the Savings Association Insurance Fund - has asked the Federal Deposit Insurance Corp. to investigate its power to impose charges on institutions that want to leave one fund for the other.
Because they soon will be paying insurance premiums that are five times as high as bank rates, thrifts are looking for ways to shift deposits from the thrift fund to the Bank Insurance Fund.
The FDIC is still working on its response to Rep. Leach, but rooting through recent banking bills the FDIC turned up something interesting.
In addition to the well-known authority to charge entrance and exit fees, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 gives the agency the power to impose fees on newcomers to an insurance fund.
Section 206 of the thrift-bailout law states: "Any institution that becomes insured by the corporation ... shall pay the corporation any fee which the corporation may, by regulation, prescribe after giving due consideration to the need to establish and maintain reserve ratios in the Bank Insurance Fund and the Savings Association Insurance Fund."
The FDIC has no such regulation on its books today, and it would take months to issue a proposal, collect comments, and finalize new rules.
But the finding is enticing, and much broader than the FDIC's existing authority to levy exit and entrance fees on institutions that switch funds.
With the power to impose fees on newly insured institutions, the FDIC could make it a lot more expensive for thrifts that want to escape high insurance premiums by chartering banks and siphoning deposits from the thrift fund to the bank fund. …