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Inside Washington (11/11/2010)
* WASHINGTON (11/12/10)--Large banks are likely to feel the greatest impact from proposed assessment changes announced this week by the Federal Deposit Insurance Corp (FDIC). Instead of calculating premiums based on domestic deposits, the FDIC is seeking to base premiums on assets minus capital to reflect total liabilities and meet mandates created by the Dodd-Frank law. Large banks benefit from the existing deposit-based formula because they can engage in foreign deposits or other alternative funding options without paying a premium to the FDIC, although the FDIC still carries the risk. Observers said large banks could react to the change by increasing competition for domestic deposits, focusing on noninterest income or switching to funding sources that fall outside reporting requirements (American Banker Nov. 9/10). The change in the premium base prompted the FDIC to propose new assessment rates, with banks asked to pay rates ranging from 5 to 35 basis points per average total assets minus Tier 1 capital, which compares to the existing range of 12 to 45 basis points per domestic deposits. Small banks are likely to gain the greatest benefit from the new assessment system. The FDIC also adjusted its risk-based rating system for all banks to reflect the premium shift and said it would adjust its earlier proposal to revise the risk formula for banks with assets above $10 billion to reflect Dodd-Frank requirements … * WASHINGTON (11/12/10)--Elizabeth Warren has put credit cards at the top of the list of issues that will be tackled by the Consumer Financial Protection Bureau. Warren is charged with launching the new agency in her role as assistant to the president and special advisor to the U.S. Treasury secretary. In an interview earlier this week, Warren said the fine print in credit card disclosures should be eliminated (American Banker Nov. 10). Instead, credit card companies should provide information about up-front fees, interest rates, penalties and reward programs in a format that allows consumers to easily compare credit card products. During two months’ of meetings with financial institution representatives, Warren said leaders of community financial institutions focused on compliance issues, while large bank representatives were concerned about a fair marketplace for competing on offerings such as consumer credit …


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