Wednesday, May 13, 2009

Another way that the feds reward bad behavior

Bank failures are forcing small healthy banks to subsidize banks who failed with higher insurance rates. The more failures there are, the higher the average cost of providing insurance.
the bill from the Federal Deposit Insurance Corporation, which is basically an insurance fund underwritten by banks. Last year, DeMotte paid $42,000 into the fund. This year, because of failures in other parts of the country and particularly among national banks, that sum will rise to $500,000 or more.
Why not use risk adjusted pricing?

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