FDIC Charging Fees to Insure Bank Deposits

By Charles Bassett, NEWS 9

OKLAHOMA CITY -- The economic crisis is forcing bankers across the country, including in Oklahoma, to shell out their own money to ensure their depositors are covered.

For customers, your deposits are safe thanks to the FDIC, but to ensure those deposits stay safe, bankers are having to pay to make sure the FDIC continues to operate.

Like most banks, Legacy Bank is insured by the Federal Deposit Insurance Corporation. The FDIC insures deposits up to $250,000. But the FDIC said its funds are running low and they want banks to help out.

"It was expected because bad times bring losses for the FDIC, and banks have to make up those losses," Legacy Bank CEO Steve Carmack said.

Due to the surge in bank failures, the FDIC has seen its reserve fund drop from $34.6 billion to $18.9 billion. Banks contribute every year to the fund, but this year they will be assessed an additional fee.

"For my individual bank, it will be roughly $860,000," Carmack said.

The total contribution from Oklahoma banks will be more than $200 million going to the FDIC reserve fund.

"The banks have paid for the fund. It's not taxpayer money and they will continue to reestablish and reinvigorate the fund as they have in the past," said Roger Beverage with the Oklahoma Bankers Association.

Beverage said the unexpected payout will affect the bank's capital, liquidity and earnings, which could trickle down to customers.

"That in turn is going to show up for consumers in terms of lower rates on savings, and probably higher rates on loans. And it's probably going to also encourage some bankers to hunker down even further than they already have," Beverage said.

The same thing happened in the 80's when several Oklahoma Banks failed and had to be bailed out. Bankers today said they are not happy with the extra expense, but they know it's necessary.

"It hurts. Nobody wants to pay a large bill, but the fact is it has to be paid and that's what keeps the system solvent," the Legacy Bank CEO said.

The FDIC said its funds were drained by 25 bank failures last year.