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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