FDIC Federal Register Citations

From: Gary Weirauch
Sent: Tuesday, November 11, 2008 11:09 AM
To: Comments
Subject: RIN #3064-AD37

Gentlemen,

As a $130,000,000 community Bank with no unsecured debt for you to insure except for the $300,000 of Federal Funds borrowed on 9/30/08, I find your program exceedingly expensive for a Bank with 10% Tier one capital and a 1% ROA.  It appears that I, as a credit worthy customer, will be paying a 75 bp up-charge to borrow when our capital and profitability indicate that we should be doing business as usual.  To avoid this, I will need to pledge securities and make my fed funds line a secured borrowing which further restricts my liquidity in a time when liquidity is king. The solution, of course, is to not borrow and subsequently, not lend. The not lending is the part that everyone is trying to avoid yet this exacerbates the problem.

It is my current view that we will opt out of this portion of the TLGP.  A more reasonable solution would be to omit Fed funds borrowing form this portion of the TLGP and cover all other unsecured debts for those institutions needing the coverage.  Then credit worthy banks could continue to lend among themselves without added cost and those that cannot, should be able to come to the discount window and borrow at what ever charge you see fit based on their financial condition. 

Since we shall be paying at least $100,000 more FDIC insurance for each of a minimum of five years for a problem we didn’t cause, why saddle us with another charge we don’t need.

Thank you, 

Gary Weirauch, CEO
Citizens State Bank of Loyal