FDIC OKs Rescue Plan for S & L Fund

The Federal Deposit Insurance Corp. on Tuesday approved a plan to rescue the savings and loan deposit insurance fund by having thrifts make a one-time payment of $4.5 billion.

The five-member FDIC board unanimously passed rules to rescue the Savings Assn. Insurance Fund, a week after Congress included the rescue language in a broader bank reform bill. The law eliminated the possibility of additional taxpayer financing for the thrift crisis, which cost taxpayers about $481 billion.

The SAIF, which insures customer deposits up to $100,000, had been weakened due to a declining number of S&Ls; as well as large debt payments on S&L; rescue bonds. However, S&Ls; have largely recovered since the crisis of the 1980s and are generally strong at this point. The FDIC oversees the separate deposit insurance funds for banks and S&Ls.;

The FDIC-approved levy is a special one-time assessment on S&Ls; that will bring the deposit fund to its target level of $1.25 per $100 in deposits. The $4.5-billion payment, technically charged on thrifts’ third-quarter earnings, will be collected by Nov. 27.

The rules will exempt 27 thrifts holding $4 billion in deposits from the fee because they’re either too weak to make such a large payment or for other reasons spelled out by Congress.

With the SAIF fully funded, the FDIC will revise the annual premiums to a sliding scale, with healthy thrifts paying only a minimal maintenance fee and weak thrifts paying at a rate of 27 cents per $100 in deposits. The bank insurance fund has a similar sliding scale that rewards healthy banks by basically eliminating a deposit insurance premium.

Under the rules, the nation’s commercial banks will help thrifts make the annual $780 million in payments on government bonds issued for the thrift bailout, known as Financing Corp., or Fico, bonds.