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FDIC Requests Premium-Increase Comments
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The FDIC requested comment on its proposed
rule to raise deposit insurance premiums beginning in the first quarter
of 2009. Comments on the proposed rule are due by Nov. 17. The agency
proposes to raise premiums by seven basis points during the first
quarter of 2009, with a series of additional risk-based adjustments
that would take effect in the second quarter.
Under the FDIC proposal, premiums for Risk Category I banks will
increase from five to seven basis points to 12 to 14 basis points for
the first quarter of 2009. After that, base rates for these
institutions-approximately 90 percent of all banks-would be set at 10
to 14 basis points, with additional adjustments resulting in rates
between eight and 21 basis points. The agency offers an assessment rate
calculator to help financial
institutions determine assessment rates under the proposed rule.
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Agencies Act on ICBA-Crafted GSE Stock Tax Correction
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Federal banking agencies issued interagency guidance
to help implement ICBA-crafted measures to provide fair tax treatment
for losses on Fannie Mae and Freddie Mac preferred shares following the
federal takeover of the mortgage-finance firms. The change in tax
treatment from capital to ordinary losses was included in the Emergency
Economic Stabilization Act of 2008.
The agencies announced they will allow banking organizations to
recognize the benefits of the tax change in their third quarter 2008
regulatory capital calculations, even though the tax change was not
adopted by Congress until the fourth quarter. The agencies said they
plan to provide further instructions.
ICBA has been the leader in pressing federal banking regulators to
issue guidance on the matter for the third quarter call report.
Assistance from the Troubled Asset Relief Program for community banks
that suffered the most serious impact from preferred share losses was
also included in the Emergency Economic Stabilization Act. Read ICBA Statement.
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Treasury Requests Troubled Asset
Guarantee Comments
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The Treasury Department is requesting public comment on
the establishment of a guarantee program for troubled assets required
by the Emergency Economic Stabilization Act. The program will guarantee
principal of, and interest on, troubled assets originated or issued
prior to March 14, 2008.
Treasury invited comments on how the program should be structured, how
premiums should be calculated, which institutions and assets should be
eligible and other considerations.
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Bernanke Echoes Community Bank Drive for Market
Diversity
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Following his speech to the Economic Club of New York,
Federal Reserve Chairman Ben Bernanke said the American financial
system needs to maintain diversity and avoid excessive concentration.
"We need to have that local knowledge that is incorporated in local
lending, local community banking," Bernanke said in a
question-and-answer session. "[I]if we have oversight, if we
strengthen the system so that it's less prone to be damaged by the failure
of one firm, and if we develop a resolution regime, I think we will at
least get our hands around the too-big-to-fail problem."
Bernanke echoed the concerns of ICBA, community bankers and many in the
American public that allowing institutions to grow so large that they
are considered too big to fail threatens the financial system and
creates distortions in market discipline.
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IRS Issues Guidance on Federal Stabilization Programs
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The IRS issued guidance on treating assets and instruments
acquired by the Treasury Department through recently enacted financial
stabilization programs. According to the guidance, amounts provided to
financial institutions by Treasury under the Troubled Asset Relief Program
will not be treated as federal financial assistance within section 597
of the Internal Revenue Code. Additionally, shares of loss corporation
stock acquired by Treasury via the Capital Purchase Program
generally are considered outstanding.
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