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IBAA OPPOSES FDIC EXAMINATION FEES FOR STATE-CHARTERED BANKS

 WASHINGTON, April 28 /PRNewswire/ -- In testimony prepared for the House Banking Committee, the Independent Bankers Association of America (IBAA) today strongly opposed a proposal that would require the Federal Deposit Insurance Corporation (FDIC) to impose an examination fee on state-chartered banks. Such a fee would heap more burden on institutions already bogged down by unnecessary regulations, IBAA told Congress.
 IBAA President James R. Lauffer urged the House Banking Committee to reject the proposal because it would affect mostly small banks, which comprise the bulk of state-chartered institutions. Additional examination costs would curtail community banks' ability to make small- business loans essential to job creation, he said.
 "Higher exam fees will decrease the resources that state-chartered banks have to make these loans," said Lauffer, chairman/president/CEO of the First National Bank of Herminie, Penn. "This will result in slower economic growth and fewer new jobs."
 Lauffer said the examination fee proposal is being driven not by FDIC budgetary needs, but by the need to trim the national deficit. He urged the committee to consider alternative deficit-reduction measures that would restore fairness to the deposit-insurance system.
 "The IBAA does not advocate using the FDIC income, from whatever source, as a way to offset the federal budget deficit," Lauffer said. "FDIC charges should be based on sound insurance principles, and not imposed or increased just to offset the cost of completely unrelated government programs."
 One alternative would be to assess deposit-insurance premiums on deposits in foreign branches of U.S. banks, Lauffer said. Under the "too-big-to-fail" doctrine, the FDIC grants foreign depositors unlimited deposit-insurance coverage without charging them a premium. Including these deposits in the FDIC assessment base could raise approximately $770 million in 1993 and $3.08 billion over the next four years, he said.
 "It is grossly unfair for U.S. banks with foreign branches to ask the rest of the industry to subsidize its too-big-to-fail protection," Lauffer said.
 Another alternative would be to change bank-liquidation rules to grant depositors preference over general creditors, Lauffer said. The FDIC reaps substantial benefits in about 30 states where depositor- preference rules apply. Extending deposit preference to all insured institutions could save the FDIC up to $400 million per year, he said.
 IBAA is the only national trade association that exclusively represents the interests of the nation's community banks.
 -0- 4/28/93
 /CONTACT: Ken Guenther or Steve Verdier of the Independent Bankers Association of America, 202-659-8111/


CO: Independent Bankers Association of America ST: District of Columbia

IN: FIN SU:

MH-TW -- DC015 -- 1887 04/28/93 10:27 EDT
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Date:Apr 28, 1993
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