PRESS RELEASE
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
March 7, 2000
Media Contact:
Phil Battey (202) 898-6993
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-16-2000
FDIC CHAIRMAN ANNOUNCES COMPREHENSIVE REVIEW OF
DEPOSIT INSURANCE SYSTEM; WILL SOLICIT VIEWS FROM INDUSTRY
AND CONSUMER GROUPS
The FDIC is undertaking a comprehensive review of the nation's deposit insurance
system, Chairman Donna Tanoue announced in a speech today. She also said that the
FDIC will hold meetings to solicit feedback from industry officials, consumer groups and
other interested parties, starting with a roundtable discussion of deposit insurance
reform in April.
"Bank customers in the United States know that their bank deposits are insured -- they
can rest assured that their insured savings are safe." Chairman Tanoue told the annual
convention of the Independent Community Bankers of America (ICBA), meeting in San
Antonio. However, she added, "Given the changes underway in our financial system...a
reexamination of deposit insurance has never been more timely."
Chairman Tanoue said one issue the FDIC would take a hard look at is the pricing of
deposit insurance. For example, is the premium system fair in its treatment of different
types of institutions, including large vs. small banks? Is it "sufficiently forward-looking" to
address excessive risk-taking? And, does the system unnecessarily allow some banks
to increase risks to the insurance funds without paying additional costs?
Also, the FDIC will review whether the $100,000 deposit insurance limit should be
increased. "Certainly, in terms of purchasing power, $100,000 isn't what it was in 1980
when the current level of coverage was set," Chairman Tanoue said. However, she
stressed that policymakers must consider how raising the insurance coverage could
affect the behavior of depositors as well as institutions.
"We must be mindful of incentives and the potential for unintended consequences
whenever we consider significant changes to the deposit insurance system," she
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
March 7, 2000
Media Contact:
Phil Battey (202) 898-6993
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-16-2000
FDIC CHAIRMAN ANNOUNCES COMPREHENSIVE REVIEW OF
DEPOSIT INSURANCE SYSTEM; WILL SOLICIT VIEWS FROM INDUSTRY
AND CONSUMER GROUPS
The FDIC is undertaking a comprehensive review of the nation's deposit insurance
system, Chairman Donna Tanoue announced in a speech today. She also said that the
FDIC will hold meetings to solicit feedback from industry officials, consumer groups and
other interested parties, starting with a roundtable discussion of deposit insurance
reform in April.
"Bank customers in the United States know that their bank deposits are insured -- they
can rest assured that their insured savings are safe." Chairman Tanoue told the annual
convention of the Independent Community Bankers of America (ICBA), meeting in San
Antonio. However, she added, "Given the changes underway in our financial system...a
reexamination of deposit insurance has never been more timely."
Chairman Tanoue said one issue the FDIC would take a hard look at is the pricing of
deposit insurance. For example, is the premium system fair in its treatment of different
types of institutions, including large vs. small banks? Is it "sufficiently forward-looking" to
address excessive risk-taking? And, does the system unnecessarily allow some banks
to increase risks to the insurance funds without paying additional costs?
Also, the FDIC will review whether the $100,000 deposit insurance limit should be
increased. "Certainly, in terms of purchasing power, $100,000 isn't what it was in 1980
when the current level of coverage was set," Chairman Tanoue said. However, she
stressed that policymakers must consider how raising the insurance coverage could
affect the behavior of depositors as well as institutions.
"We must be mindful of incentives and the potential for unintended consequences
whenever we consider significant changes to the deposit insurance system," she
continued. "In the end, the question of higher coverage limits boils down to what we
consider to be good public policy."
To gather additional facts and feedback before making recommendations, Chairman
Tanoue announced that the FDIC will invite leaders of major national and state trade
associations, and other organizations, to a roundtable discussion of deposit insurance
reform in April. The FDIC also will work with consumer groups that have views on
deposit insurance reform. In addition, the agency plans to hold outreach meetings with
bank chief executive officers in late May and in June. Based on these meetings and
additional staff analysis, she said, the FDIC expects to publish for comment a set of
policy options in mid-July.
"At the FDIC, we are proud of the certainty and stability that we have provided the
nation for three generations of Americans," Chairman Tanoue concluded. "By refining
some of the elements in our system - by eliminating inequities - and by addressing
unintended consequences in our system, we can improve the service we provide the
public."
# # #
Attachment: FDIC Chairman Tanoue speaks before the Annual Convention Of the
Independent Community Bankers of America
consider to be good public policy."
To gather additional facts and feedback before making recommendations, Chairman
Tanoue announced that the FDIC will invite leaders of major national and state trade
associations, and other organizations, to a roundtable discussion of deposit insurance
reform in April. The FDIC also will work with consumer groups that have views on
deposit insurance reform. In addition, the agency plans to hold outreach meetings with
bank chief executive officers in late May and in June. Based on these meetings and
additional staff analysis, she said, the FDIC expects to publish for comment a set of
policy options in mid-July.
"At the FDIC, we are proud of the certainty and stability that we have provided the
nation for three generations of Americans," Chairman Tanoue concluded. "By refining
some of the elements in our system - by eliminating inequities - and by addressing
unintended consequences in our system, we can improve the service we provide the
public."
# # #
Attachment: FDIC Chairman Tanoue speaks before the Annual Convention Of the
Independent Community Bankers of America