P.M. BRIEFING : No Higher Premiums, FDIC Says
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WASHINGTON — The chairman of the Federal Deposit Insurance Corp. warned today that raising bank premiums to bolster the nation’s shrinking insurance fund will cut into the profits of the ailing industry.
“A higher premium cannot be the answer to the problem,” FDIC chief L. William Seidman told the House Banking Committee. “We weaken the overall soundness of the banking industry through reducing profits.”
Weaker banks would fail if forced to pay higher premiums, he said.
Seidman said he agreed with Federal Reserve Board Chairman Alan Greenspan that more steps must be taken for banks to bolster their capital reserves--and not rely heavily on the government.
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