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 July 11, 2006 #06-39
E-mail: [email protected]

ACB STATEMENT ON FDIC DEPOSIT INSURANCE PROPOSAL

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Statement by Diane Casey-Landry, president and CEO, America’s Community Bankers, on the deposit insurance proposals issued by the FDIC today:

The FDIC has taken the correct approach by attempting to make the process of determining insurance premiums as objective as possible based on publicly available information. However, we will urge the FDIC to make 1 basis point the lowest premium rather than the proposal’s 2 basis point minimum, so that the premium for 1A category (least risky) banks would range from 1 to 4 basis points.

ACB will carefully review the proposed bifurcated system for assessing risk and its effect between large and small banks. We understand the rationale for considering the additional information that may be available on large institutions. But we will need to assess the potential downside that there could be disparate treatment between banks of different size with the same risk profile.

ACB notes that Federal Home Loan Bank advances are not “volatile liabilities,” as noted in the proposal, but are one of the most stable funding sources available to community banks in need of liquidity. The use of advances reduces risk, and institutions that effectively use advances should not be subjected to higher assessment rates.

We look forward to providing detailed comments on this complex proposal.

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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