Deposit insurance reform and the community bank

The Federal Deposit Insurance Corp. (FDIC) is in favor of the deregulation of the financial services industry, and it emphasizes the industry's need for greater supervision. The FDIC has requested authority to institute risk-based insurance premiums. It has also asked Congress for greater flexi...

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Bibliographic Details
Published in:Journal of retail banking services : JRBS 1987-07, Vol.9 (2), p.51
Main Author: Harrison, William B
Format: Article
Language:English
Subjects:
Bank failures
Bank Profitability
Bank reserves
Capital
Capital Adequacy
Community banks
Debentures
Deposit insurance
Deregulation
Garn-st. Germain Depository Institutions Act
Insurance premiums
Interstate banking
Mergers & Acquisitions
Midsize Banks
Pricing
Profitability
Ratios
Reforms
Regulation
Risk
Thrift Failures
Us Congress
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Summary:The Federal Deposit Insurance Corp. (FDIC) is in favor of the deregulation of the financial services industry, and it emphasizes the industry's need for greater supervision. The FDIC has requested authority to institute risk-based insurance premiums. It has also asked Congress for greater flexibility through: 1. federal depositor preference, 2. lower limits on interstate mergers, 3. modified payoffs, 4. increased capital requirements with subordinated debt, 5. supplemental-adjusted capital requirements, 6. operation of a bridge bank, and 7. full insurance of foreign and domestic deposits. The ideas set out by the FDIC are acceptable to most banks. The community bank is usually strong and well-situated, and in general, community bank failures have been associated with local, rather than nationwide, economic failures. Most community banks seem favorably disposed to some of the main proposals for risk-based federal deposit insurance premiums. However, community banks in particular feel the discriminating effects of any policies based on the premise that big banks must not be allowed to fail. In addition, they will be opposed to a merger of the FDIC and the Federal Savings & Loan Insurance Corp.
ISSN:0195-2064