Federal Deposit
Insurance Corporation

From: Bob Mickey
Sent: Wednesday, November 05, 2008 4:39 PM
To: Comments
Subject: Assessments - RIN-3064-AD35 

Re: RIN 3064-AD35 FDIC proposed assessments 

I would like to present the following points of concern with respect to recent FDIC proposals to increase deposit insurance rates: 

• Brokered deposits are a cost-effective funding source that are frequently less expensive than other funding options.  

• Brokered deposits are an important source of liquidity to banks in this economic environment and should not be needlessly discouraged.  

• The 10% brokered deposit threshold and the 20% growth threshold are artificially low. Neither benchmark is an indication of risk to the deposit insurance fund.  

• The 10% brokered deposit threshold will discourage reasonable brokered deposit use above that amount because banks and examiners will view it as a cap, not a guideline.  

• The fact that DTC brokered deposits are not eligible for early withdrawal (except in the rare case of death or adjudication of incompetence), assists the banking institution in the event that customers choose to make a “run on the bank” which has occurred and adversely effected insured institutions in the recent past often adding to the probability of failure of the institution. 

While it seems obvious that deposit rates will need to be increased to restore fund balances due to the evolving economic strains, banks such as ours that have been reasonably prudent with our lending decisions should not be unduly punished for helping our communities we serve participate in the growth that proceeded this current unfortunate situation. Due to limited availability of core deposits we have turned to other funding sources, such as brokered deposits, to fund our lending activity. This very lending activity had previously been viewed by regulators as beneficial to the economy. Until some unanticipated growth in core deposits occurs it will apparently be necessary to continue access wholesale funding sources to continue lending activities. The proposed increased brokered deposit insurance rates will not assist this bank in it’s ability to fund future loans which are vital to the economy.  

Robert E. Mickey
President
F&C Bank
Holden, MO