Most Banks Up, Running in Storm-Affected Area

Most of the 280 banks and savings and loans in hurricane-stricken areas have reopened branches and are operating normally again, and they’re not expected to have financial problems in the long term, regulators said Thursday.

Still, some lawmakers are pushing a plan to raise the $100,000 limit on federal account insurance so that smaller banks aren’t hurt by depositors pulling out their money.

Most banks and thrifts in the affected areas are operating normally now, with about 420 of the 5,000 branch offices in the area still closed as of Thursday, according to the Federal Deposit Insurance Corp. Some institutions have set up temporary offices and switched to backup computer systems.

Even in cases in which banking offices sustained very heavy damage, customers should be able to get access to their money by check or automated teller machine, the FDIC said.

The 280 banks in the affected areas -- 164 in Louisiana, 100 in Mississippi, 15 in Alabama and one in Florida -- have a total of nearly $270 billion in assets, according to the agency.

“Consumers, as always, can rely upon the guarantees provided by the FDIC,” agency Chairman Donald Powell said in a statement. “Their federally insured deposits are fully protected. No depositor has ever lost one cent in a federally insured account.”

Accounts currently are insured for up to $100,000, the level that has been in effect since 1980. The House overwhelmingly passed a bill in May raising the ceiling to $130,000 to keep pace with inflation -- and to $260,000 for individual retirement accounts and 401(k) plans held in banks -- but the Senate has not acted.

In the aftermath of Hurricane Katrina, some key lawmakers want Congress to raise the limit for banks in the affected areas.

Louisiana, Mississippi and Alabama are dotted with small, community banks. Some customers in affected areas could pull their accounts out of smaller banks that they believe could fail and put their money into bigger, national banks, warned Massachusetts Rep. Barney Frank, the senior Democrat on the House Financial Services Committee.

“There is a fear that these banks might go under” that could prompt depositors to withdraw their funds from them, Frank said.