Conservative / Community / Traditional Bankers = Don't you feel like this is what the FDIC is saying ?!!?!?

Dear Valued Senior Citizen Customer who drives 3,500 miles per year

As always we appreciate the opportunity to insure you vehicle.

However, as you are aware, we also provide insurance for all UPS and Fedex vehicles, and for various companies ranging from Nascar Drivers to Pizza Delivery drivers.

Due to the fact that so many Nascar Drivers have wrecks and the fact that the unprecedented snow storms across the country have caused so many UPS and Fedex drivers to have wrecks – our insurance fund has been depleted to record low levels, and may reach zero during 2009.

We realize that times are tough and your income has likely been decreased by the current snow storms across the country, but we must all understand the “Systemic Importance” UPS, Fedex, Nascar, and other such companies, and asking them to pay more in order to rebuild our insurance fund during these tough times is just not a viable option. (Little people like you are not "Improtant", except to rebuild our fund)

We have weighed the options and determined that the only source of funding available to bring our insurance fund back up to required levels is to assess a special charge on all of the safe drives who are insured with us.

We will be raising your insurance rates somewhere in the range of 50% and will also be charging you a special one time assessment in September; this one time assessment will be based on the size of your insured vehicle and is estimated to be in the range of 25 – 50% of your anticipated net income for 2009.

Of course we retain the option of coming back to you later in the year with another special assessment, but hopefully it will be half-price of this September assessment.

A more official venting from the ICBA.

http://www.informz.net/ind-comm-bank/archives/archive_738663.html

Cam used to be my boss back in the day.

My opinion of the assessment? See my signature.

Yeah, Cam's letter got me to wondering how we could explain this to the average man on the street & he does refer to the "Systemically Important" -vs- "Systemically Unimportant" banks = thats where I got it.

Apparently, when it comes time to find bail money (uh, I mean, bailout money), we are "systemically important."

I like how the ICBA is no longer referring ot the big banks as "too big to fail" but now calling htem "the miserable 8."

Of coursem, the FDIC has $30-billion in "bailout" money at their disposal but has not taken it because they "don't want to send the wrong message to the American public." Goobers...

I am posting below an e-mail response received from ABA this morning regarding the calculation for the special assessment. For anyone familiar with calculating the quarterly assessment:

YOU WILL STILL BE ABLE TO APPLY THE ASSESSMENT FACTOR TO YOUR DEPOSIT BASE BEFORE CALCULATING THE 20 BASIS POINT ASSESSMENT!!

For us, a bank with around $250MM in deposits, that equates to a $5,000 special assessment, compared to a $500,000 special assessment without applying the assessment factor. In other words, you DO NOT apply the 20 basis point fee directly to your deposit base.

I think the overall impact of the special assessment will be dramatically less than what the industry anticipates due to this "technical" clarification. I hope this source is reliable and the word spreads!

Question:
When trying to estimate the impact of the proposed "special assessment" we were unclear as to whether we would get to apply the same "assessment factor" that is used when determining quarterly premium assessments. We currently multiply the assessment rate (which will now be .03% quarterly) by this "factor" before applying it to the deposit base.
The ability to use this factor when applying the special assessment will make a significant impact on the calculation (for us, $5M vs. $535M). Has the FDIC specified if this will be the case?

Thank you,

Response:
If I understand your question correctly then yes, you will use the "assessment factor" to calculate the 20 b.p. special assessment. I believe you are referring to the "assessment factor" that is applied to your total deposits to calculate your premium assessment base. If this is what you are talking about then yes, you will still use this factor.

Rob Strand
Senior Economist
American Bankers Association
1120 Connecticut Ave, NW
Washington, DC 20036-3902

I actually called the FDIC help line on Monday. I specifically asked her about applying the assessment factor to the 20 basis points and she said NO. I don't think any of them really know what they are doing or what is going on. The head honchos over there better decide exactly what is going on and send a letter out clarifying how to calculate this assessment.