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Inside Washington (02/03/2011)
* WASHINGTON (2/4/11)--The Federal Deposit Insurance Corp. will meet Monday to finalize several deposit insurance measures and a proposal to prohibit risky compensation plans (American Banker Feb. 3). Among the changes, which were first proposed in November, is a new method for calculating deposit insurance assessments, as required by the Dodd-Frank Act. Under the new proposal, the FDIC would multiply a bank’s risk-based insurance rate by its assets minus its capital--instead of by its deposits--to calculate an assessment. The reform is meant to capture the nondeposit liabilities, used primarily by large banks, in their premiums. The FDIC has also proposed changes in how it comes up with risk-based rates for large banks. Under the new rule, the risk formula for large institutions would make their insurance prices more risk sensitive. The agency is also expected to issue another proposal, drafted jointly with other agencies, requiring greater disclosure of compensation agreements for top banking executives. Under Dodd-Frank, financial institutions must report their compensation plans and eliminate excessive pay packages. The meeting agenda is available online here … * WASHINGTON (2/4/11)--Fifth Third Bancorp, Cincinnati, has fully repaid its $3.4 billion in outstanding Troubled Asset Relief Program (TARP) funds, the Treasury Department announced Wednesday. With the transaction, total repayments and other income from programs within TARP to provide direct financial support to banks (about $243 billion) have nearly surpassed total disbursements (about $245 billion). Treasury currently estimates that bank programs within TARP will ultimately provide a profit of nearly $20 billion to taxpayers. Overall, across all TARP programs--including financial support for banks, the domestic auto industry, and American Insurance Group; targeted initiatives to help restart the credit markets; and foreclosure prevention programs--Treasury has disbursed a total of approximately $410 billion. With the Fifth Third payment, total program repayments (roughly $238 billion) and other income (about $36 billion) have reached more than $274 billion. Fifth Third Bancorp had previously paid a cumulative total of $340.8 million in dividends to Treasury on those preferred shares--representing a return on this investment of approximately 10%. Treasury also continues to hold warrants to purchase Fifth Third Bancorp common stock …


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