March, 09, 2010

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, called yesterday for an upfront levy on large financial institutions to pay for the costs of their failure - but she signalled a willingness to compromise.As regulatory reform talks grind towards a conclusion in the Senate, Ms Bair told the Financial Times that she was still pushing for a pre-funded "resolution authority" to wind down the next Lehman Brothers even though the biggest banks face an additional $90bn (€66bn, £60bn) tax announced by President Barack Obama.

"I think it would be for both in aggregate about $10bn a year," she said. "It is not an insignificant amount of money but spread over the largest institutions that would be paying into it - I don't think it would be a tremendous hit to their balance sheet."A tentative agreement in the Senate banking committee would recoup the costs of winding down a large bank but would not levy an upfront fee, according to people familiar with the -discussions.

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