FDIC shifts failure cost burden to big banks

WASHINGTON (Reuters) -- Big U.S. banks will have to shoulder a larger portion of a one-time industry fee to replenish the fund used to resolve bank failures, according to a rule approved Friday by the Federal Deposit Insurance Corp.

The FDIC will charge U.S. insured depository banks a 5 basis point assessment based on each institution's assets, minus its Tier 1 capital. It would be collected in the third quarter.

The proposal modifies a prior decision to charge banks a special one-time fee of 20 basis points based on domestic deposits.

The agency also got the power to collect additional special assessments in the fourth quarter of 2009 and the first quarter of 2010 if the deposit insurance fund fell to a level that threatened public confidence.

Comptroller of the Currency John Dugan voted against the measure, calling the shift of the assessment burden "perverse" because the deposit insurance fund has been largely drained by the failure of smaller banks. (Florida bank collapses - firms swoop in)

FDIC Chairman Sheila Bair said the revised assessment appropriately shifts the costs, and noted the revised fee will be lower than the original proposal for all banks.

"A lot of large banks haven't failed because of massive government assistance," Bair said. "If it weren't for those, some big banks would have failed and there would have been costs."

The FDIC also upwardly revised the expected loss for the insurance fund to $70 billion over the next five years. The prior estimate was $65 billion.

The special fee will collect about $5.6 billion for the FDIC, compared with an estimate of $15 billion for the original proposal.

The agency said it will likely have to charge additional special assessments later this year.