Bankers Split on an FDIC Guarantee Extension

[Dover]

WASHINGTON — Whether a banker wants the Federal Deposit Insurance Corp. to extend its blanket guarantee for non-interest-bearing deposits turns mainly on his view of the economy.

JPMorgan Chase & Co., Wells Fargo & Co. and BB&T Corp. all oppose an extension beyond yearend, arguing the need for the Transaction Account Guarantee Program has faded.

"Conditions in the financial industry have improved significantly since the introduction of the" program last October, Donna Goodrich, a senior executive vice president at BB&T told the FDIC in a letter. "Financial institutions are now able to access the capital markets to issue both debt and equity. These are positive signs that public confidence in the financial services has been restored."

But other institutions, particularly banks in areas hard hit by failures, warned that depositors remain nervous and TAG is still needed.

"The client-base sensitivity to insured deposits is extreme," Chad Bense, a vice president at $165 million-asset Minnesota National Bank, wrote in a letter. "The environment created warrants the continuation of the program beyond 2009." ...cont'd

http://www.americanbanker.com/issues/174_153/bankers_split_on_an_fdic_guarantee_extension-1000847-1.html