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