March 06, 2009

The head of the Federal Deposit Insurance Corp. has agreed to halve a new emergency fee on U.S. banks in exchange for Congress more than tripling the agency's borrowing authority to tap federal aid if needed to replenish the deposit insurance fund.Word of the move by FDIC Chairman Sheila Bair came Thursday, four days after she warned that the fund insuring Americans' deposits could be wiped out this year without the new fees on U.S. banks and thrifts.

Banks, especially smaller community banks, have been chafing over the new insurance fees, saying they will place an extra burden on an already struggling industry.Bair is agreeing to cut the new emergency premium, to be collected from all federally-insured institutions on Sept. 30, to 10 cents for every $100 of their insured deposits from the 20 cents the FDIC approved last Friday. That compares with an average premium of 6.3 cents paid by banks and thrifts last year.