FDIC sees hiring boom; bank insurance premiums to jump
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A hot growth company for 2009: the Federal Deposit Insurance Corp.
The bank regulatory agency today said its board approved a $2.24-billion operating budget for the new year, a jump of more than $1 billion from this year.
‘The increase in spending is largely attributable to continuing work associated with recent bank failures and the provision of contingency funding for the possible continuation of an elevated number of bank failures in 2009,’ the FDIC said in a statement.
The agency noted that failures have totaled 25 so far this year, up from just three in 2007.
Want a job? The FDIC said its board approved a staffing level of 6,269 for next year, an increase of 1,459 positions from the level authorized at the beginning of 2008.
‘The additional staff, most of which is temporary, will be hired primarily to perform bank examinations and other bank supervisory activities and to address bank failures, including the management and sale of assets retained by the FDIC when a failed bank is sold,’ the agency said. ‘The staffing numbers include the recently announced 600 employees that will work out of the West Coast consolidated satellite office, located in Irvine, and 520 employees in the division of supervision and consumer protection.’
Bank failures this year, including IndyMac Bank and Washington Mutual, have taken a heavy toll on the FDIC’s insurance fund. Assets of the fund totaled $34.6 billion at the end of September, down 23.5% from the end of June.
To rebuild the fund’s assets, the FDIC today announced a boost in the insurance premiums banks pay.
Paul Jackson at HousingWire.com offers some perspective:
Most banks are set to see their deposit insurance premiums double next year, after the FDIC announced it had voted to adopt a final rule increasing risk-based assessment rates uniformly by 7 basis points (7 cents for every $100 of deposits), on an annual basis, for the first quarter of 2009. Currently, banks pay between 5 and 43 basis points of their domestic deposits for FDIC insurance, with most paying between 5 and 7 basis points. Under the final rule, risk-based rates would range between 12 and 50 basis points (annualized) for the first quarter 2009 assessment, with most paying between 12 and 14 basis points.
Of course, higher insurance premiums mean otherwise healthy banks will have less money to lend -- another way the economy pays a price for bank failures.
-- Tom Petruno