For the first time in nearly nine years, an acquirer of a failed bank agreed to purchase only the institution’s insured deposits, making it likely that some customers will not recoup all of their uninsured funds.
Jiko hopes to convince consumers that their funds will be safe in Treasury bills, while also generating higher returns than they would in traditional bank accounts.
The most immediate threat to the safeguards underpinning a well-functioning banking sector involves the failure of regulators to hold banks accountable.
It was mostly good news for banks in the Federal Deposit Insurance Corp.'s Quarterly Banking Profile, with higher earnings and net interest margins. But there were concerns as well, including slower loan and deposit growth.
The agency's Quarterly Banking Profile said banks earned $47.9 billion in the third quarter, helped by a 7.4% increase in net interest income from the previous year.
Bankers are generally happy with the House Republican tax plan released last week, but one provision of the proposed overhaul is likely to give them pause: a cutback in the deduction for deposit insurance premiums.
While increasing de novo activity is encouraging, the processes of chartering a bank and applying for deposit insurance are more onerous, lengthy and costly than they need to be.
The Federal Deposit Insurance Corp.'s No. 2 said deposit insurance helps prevent bank runs, but can also make banks more prone to taking on risk that can cost the public.
How most banks obtain deposits has changed radically over the past 30 years, thanks in part to innovation. It is time for regulators to rethink their notion of what constitutes a quality deposit portfolio.
The National Credit Union Administration must return all credit union monies that come from merging the insurance and stabilization funds, and halt its proposal to increase the normal operating level for the share insurance fund.
