Senate Amendment Could Alter FDIC Fees For Custodial Banks
May 04 2010 - 8:27PM
Dow Jones News
A U.S. Senate amendment altering the way the Federal Deposit
Insurance Corp. charges banks for government-backing of deposits is
raising concerns among some big banks because it would provide
different treatment for some of their rivals.
Sen. Jon Tester (D., Mont.) is offering an amendment to the
broader financial overhaul bill that would allow the FDIC to charge
banks for deposit insurance based on their total assets minus
average tangible equity. The measure, which would generally benefit
smaller banks over their larger rivals, would replace the current
system that bases assessments on a bank's total deposits.
Included in the amendment is a provision giving the FDIC new
discretion when considering how to charge "custodial" banks, which
generally provide services to institutional investors and other
financial firms rather than normal consumers. The provision, which
is in line with language already passed by the House of
Representatives, would allow the FDIC to consider a custodial
bank's assets under management and other factors when assessing
deposit insurance fees.
The potential for firms such as Bank of New York Mellon Corp.
(BK) and State Street Corp. (STT) to be charged differently for
deposit insurance has raised concerns among some of their Wall
Street peers. The FDIC hasn't taken a public position on the
amendment, but an official did say it would improve the agency's
ability to fairly assess firms such as Boston-based State
Street.
-By Michael R. Crittenden, Dow Jones Newswires; 202 862 9273;
michael.crittenden@dowjones.com
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