ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release March 30, 2001 #01-27
E-mail: [email protected]

AMERICA’S COMMUNITY BANKERS SUPPORTS DEPOSIT INSURANCE STABILIZATION BILL

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WASHINGTON, D.C. — America’s Community Bankers applauded Reps. Bob Ney (R-Ohio) and Stephanie Tubbs Jones (D-Ohio) today for introducing a bill essential to maintaining the stability of the deposit insurance system.

The bill, H.R. 1293, reflects ACB’s reform recommendations to merge the insurance funds, permit the FDIC to impose an assessment for excessive growth, and give the FDIC flexibility in recapitalizing the insurance fund over a reasonable period of time if it drops below the designated reserve ratio.

“ACB strongly supports the legislation as an essential step toward strengthening our nation’s federal deposit insurance system while other issues, which could take some time to resolve, are debated,” said Diane M. Casey, president of ACB.

“We’ve been on record for years in support of merging the insurance funds,” said Casey, “and we believe all elements of the Ney-Tubbs Jones bill are fully compatible with the recommendations expected from the FDIC next week.”

Casey said ACB believes that issues such as the pricing of insurance coverage, the appropriate level of coverage, and the structure of the insurance fund should be addressed in a less rushed atmosphere.

The Ney-Tubbs Jones bill, Casey said, would deal quickly with the “free-rider” problem, where institutions generate rapid deposit growth without paying insurance assessments. This could drag the Bank Insurance Fund reserve ratio below the required 1.25 percent. ACB supports the bill’s authority for the FDIC to impose an assessment on these excessive deposit shifts.

If the reserve ratio does fall below 1.25 percent, the bill would give the FDIC the flexibility to recapitalize the fund over a reasonable period of time. “The banking industry does not want to divert funds from community lending to pay an automatic 23-basis point premium brought on by high-growth banks that are not paying any premiums,” said Casey.

A more detailed explanation of the bill is attached.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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