Federal Deposit
Insurance Corporation

From: Gary Weirauch  
Sent: Tuesday, November 11, 2008 3:05 PM
To: Comments
Subject: RIN 3064-AD35

Gentlemen,

I wish to comment on the added FDIC insurance on brokered deposits which will be assessed to my institution.  Brokered deposits and other borrowings are not “the root of all evil” as the insurance implies. Assessing the source of funding rather than the use of funding implies an inability to assess the value or safety of the funded assets which is exactly what has happened over the past half dozen years. This causes good banks to pay once again for those who failed to have an appropriate funding policy, an appropriate asset liability model and an appropriate risk model with regard to assets funded. Core deposits do not normally allow you to extend or shorten maturities required by appropriate asset liability modeling.  They do not bring money from the financial centers to a deposit deficient rural America to help fund economic development.  They do increase your cost when one local institution is forced to “rob” from another to fund asset growth, however, there is no net new capital to the region leaving funding and economic growth neutral.

A much better policy is to assess a higher risk premium to the banks that do not monitor their assets to or take on to much risk on the asset side of their balance sheets. Of course this means appropriately assessing the A in camel. And penalizing the funding of inappropriate assets.

Thank you, 

Gary Weirauch, CEO
Citizens State Bank of Loyal