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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

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FDIC Federal Register Citations

From: Jim Monroe
Sent: Thursday, November 06, 2008 1:30 PM
To: Comments
Cc: Scott Bauer
Subject: FW: Assessments - RIN-3064-AD35

I recommend that you reconsider and rescind the proposed action to increase the FDIC assessment for banks with more than 10% Brokered Deposits and/or faster than 20% growth. My specific reasons for this recommendation are:

1.       Brokered Deposits are an attractive and viable alternative source of funding.

2.       Locally generated deposits have declined as customers invest in Money Market Funds with investment companies. These Money Market Funds then buy brokered Certificates of Deposit. We are merely reacquiring our own deposits.

3.       In many cases, Brokered Deposits are nothing but investments from out of market individuals. It is the same type of customer that we seek locally, they just happen to live out of our market.

4.       Brokered Deposits are frequently lower cost funding as local banks with credit issues pay higher rates for funding and drive up our deposit costs.

5.       Brokered Deposits are truly core funding as DTC eligible deposits cannot be withdrawn prior to their stated maturity.

6.       The 10% brokered deposit limit includes too many types of funding (such as Federal Home Loan Bank borrowings) which have previously been encouraged by regulators.

7.       The 10% brokered deposit limit is too low to support a growing institution.

8.       The 20% growth limit is too low and is counter to the goals of the TARP.

9.       In a time where banks are being encouraged to lend, this action serves to discourage growth by limiting a bank to lend only what it can fund with locally generated deposits.

10.   In a time when banks are incurring increased credit costs due to a poor economy, this adds a heavy additional expense burden.

Thank you for your consideration.

Last Updated 11/10/2008

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