Iowa Insurance

Despite strong pressure from the Bush administration and industry, regulatory bodies Federal today at the increase in premiums that banks and savings clubs to pay their insolvent insurance funds disease and the fundamental changes in how these premiums are assessed.

The 3-2 decision by the Federal Deposit Insurance Corporation, an average premium of 22 percent from January. And for the first time since 1934 that the first funds under the bank cancels depression, weak institutions, to pay greater increase as the strongest.

In order to promote prudent management practices of banks, Congress, during the past year has given the regulatory authorities before the end of 1994, about 58 years with all banks pay the same price. Impact on consumers

The increase that the administration had hoped until the last minute to block, would be a great economic impact, so that the bank more expensive for the client, there would have to pay more and to get lower yields and loans from deposits.

It would also be detrimental to shareholders of about 14500 banks and associations of savings, reduction of branch result after tax of over 4 percent. Some of the premium are also costs to taxpayers, because the institutions have the right to write a certain percentage of their premiums from their corporate tax.

Supporters of the increase say it is for the protection of confidence in the economy by strengthening the health insurance fund, which is deeply in the red and the lowest level since its inception during the depression . More big losses expected

William Taylor, president of the Insurance Corporation, said that the bank insurance fund lost about $ 11 billion last year and a deficit of over $ 7 billion it took loan the body of State, and it even more each year of losses that may be sent in the next two years. The proposed changes would have an additional $ 1.25 billion per year.

The increase averaged 28 cents for every $ 100 of deposits to 23 cents today, is expected to authorize, after a period of 60 days for comments. The smaller banks with less capital and most of the problems would pay an additional loan of 3 cents for every $ 100 of deposits, and most would pay 3 cents less.

The regulators said that the new system based on risk may take longer to create, but that any delay would not move the amount of the premium.

The Bank Insurance Fund amounted to $ 18.3 billion six years ago, was struck by failures over 885 banks to the tune of over $ 26 billion. While estimates have almost tripled, from 8.3 cents per $ 100 only three years on the latest 23 Cent, they are not in tune with the devastation of the industry.

The disparity of votes increase the premium was paid by the department of treasury representative on the board: Timothy P. Ryan, Jr., director of the Office of Thrift Supervision, and Stephen R. stone Brink, Comptroller of the single currency.

Mr. Brink stone, said in an interview he had after an increase of 4 cents, but that the Governing Council authorization of 5 cents, in another $ 250 million, was not justified. ”

After the panel to be in the direction of a movement of 4 cents increase, Mr. Taylor said he would not be enough, and two other members, CC Hope Jr. and Andrew C. Hove Jr., it occurred to support the raise 5 cents.

Mr. Taylor’s elected until February and increase the amount of the premium, a major regulatory decisions this year, had directly between the Congress and the Treasury. Today’s decision, it was clear, despite industry and the Bush administration, Mr. Taylor, there is less than a year. Tough political struggle

Mr. Taylor said that the increase in personnel has been the most difficult political struggle, he fought, said that in recent months, the industry had shown some signs of improvement, mainly due to low rates ‘interest, but it was too early to conclude that the troubled banks had developed problems with their mortgages.

“I prefer to be here for a lower premium,” he said at today’s meeting, mother packed. “But when we overestimate the problem and take too much money, would be the first time in a long period. The indications to us is overwhelming, and it is for us to do what’s right and increase the premium.