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The National Republic Bank of Chicago is a profitable, liquid, well capitalized, well run bank. We have a business model which relies heavily on brokered certificates of deposit to fund lending in the hospitality industry, which is our primary business niche. This has been our model for many years and has been accepted by the OCC, our primary regulator. This model has provided good profitability and stability in a wide variety of environments over the years.
The proposed increase in assessments for banks which exceed a 10% threshold would be extremely punitive to us as we currently have approximately 65% of our liability structure in these instruments.
We like using brokered CDs because they are liquid, stable, non rate sensitive and not subject to early withdrawal (except for nominal amounts due to deaths). For rate risk purposes, liquidity purposes and reliable funding purposes, these are perfect. We cannot understand why FDIC does not appreciate this point of view, especially since, in the current economic climate, these largely prevent "runs" on banks such as ours and thus actually provide protection for the insurance fund.
Please reconsider this proposal.
Robert W. Hinman
|Last Updated 11/12/2008||Regs@fdic.gov|