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Port Richmond Savings
2522 East Allegheny Avenue
Philadelphia, PA 19134
Robert E. Feldman
November 4, 2008
RE: Federal Deposit Insurance Corporation Notice of Proposed Rulemaking and Request for Comment - Deposit Insurance Assessments; RIN No. 3064-AD35
The Federal Deposit
Insurance Corporation (FDIC) has issued a notice of proposed rulemaking
(the Rule) with respect to deposit insurance assessments. This letter
sets forth the comments of Port Richmond Savings with respect to the Rule.
We appreciate the opportunity to address this important issue.
The proposed rule, as
drafted, effectively penalizes the use of FHLBank advances which could
result in three possible undesirable outcomes for depository institutions:
The FDIC should not assess a penalty on healthy institutions that prudently employ FHLBank advances. Advances are a critical and stable source of liquidity and liquidity risk is the most significant challenge facing the banking industry at this time.
If the FDIC proceeds with this new approach to risk-based premiums, FHLBank Advances that do not increase institution risk should be treated differently than other secured liabilities.
We at Port Richmond Savings have used low cost FHLB advances for years as they have become a critical part of our daily operating strategy. We have core capital of 15%, risk based capital of 27%, and our lowest delinquencies in years. We feel that our prudent use of FHLB advances has not increased the risk to the FDIC fund and we should not be penalized for using them. Also, an unintended conseqence of targeting FHLB advances for higher FDIC premiums may be that we stop using this low cost source of loan funds and curtail our lending which is exactly what the country does not need at this time.
|Last Updated 11/05/2008||Regs@fdic.gov|