Federal Deposit
Insurance Corporation

Machias Savings Bank

I am writing in regard to FDIC's solicitation for comments on the treatment of secured liabilities for assessment purposes. As a community bank, Machias Savings Bank is very concerned that FHLB Advances will be included in the definition of "secured liabilities", and therefore factored into the assessment rate or base for deposit insurance. We are also concerned that increased regulatory restrictions on the use of existing "secured liability" funding such as the FHLB advances (which are already very closely monitored by the FHLB) may be harmful to community bank liquidity management practices and earnings.

While we acknowledge the concerns expressed by the FDIC involving the increased use of Covered Bond secured liability financing on top of what is already in place in the banking industry. We feel that it would be short sighted to place into regulatory policy an arbitrary cap on secured liabilities (including FHLB Advances) without considering the overall liquidity management approach that each depository institution takes in context of its business model. Accordingly, increasing a depository's insurance assessment because it breached an arbitrary secured liability cap seems unfair.

Please don't penalize the smaller community institutions that are routinely utilizing FHLB Advances as part of their liquidity management with higher deposit assessment costs in order to regulate large banks, such as Bank of America or Washington Mutual, who will most likely be using the Covered Bond as a liquidity option.

Sincerely,

Debra A Getchell
Senior Vice President, CFO and Treasurer
1-800-339-3347 Ext: 2210
1-207-255-9210
dgetchell@machiassavings.com