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FDIC Federal Register Citations
From: Carl
Dodson
I am writing in response to the Federal Deposit Insurance Corporations (the
FDIC) request for comments on a proposal to increase deposit insurance
premiums. If adopted, the proposal would increase the annual assessment
rate for Risk Category I institutions from its current level of 5 to 7 basis
points to an assessment rate of 10 to 14 basis points, plus certain
adjustments. Assessments for Risk Category II institutions would increase
from 10 basis points to 20 basis points, plus adjustments. Among the
adjustments is a brokered deposit adjustment.
Our bank uses brokered deposits and finds them to be a useful and important
source of liquidity, particularly in this economic environment. Deposits
obtained through registered broker-dealers are a cost-effective funding
source that is frequently less expensive than other funding options
available to us, and should not be needlessly discouraged.
There is no evidence that the 10% brokered deposit threshold and the 20%
growth threshold are closely related to the risk of losses to the deposit
insurance fund. The 20% growth threshold over four years allows only 5%
growth per year, which cannot be viewed as aggressive.
Furthermore, the 10% brokered deposit threshold will discourage reasonable
brokered deposit use above that amount because banks and their examiners
will view it as a cap. Banks reporting more than 10% brokered deposits will
be viewed with suspicion by rating agencies and the financial press. To
avoid this stigma, banks will look to other, more expensive, sources of
funds.
We believe that the FDIC should not impose premiums on brokered deposits
except as individual bank use warrants an increase.
Carl
Dodson |
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Last Updated 11/12/2008 | Regs@fdic.gov |