Banker bonuses on hold for quite a while, rules FDIC

Bankers will have to wait for their annual bonuses this year, according to the Associated Press. The FDIC is working toward instituting a rule that would require a minimum of half of bankers’ annual bonuses to be pushed forward by three years, a move to help protect the United States economic recovery. Banks that possess $ 50 billion or more in assets will fall under the FDIC ruling. Resource for this article – Banker bonuses will have to wait three years, says FDIC by MoneyBlogNewz.

Larger insurance costs charged

There is more than just the suggested banker bonuses provision being considered for the Dodd-Frank Act. It’s also being considered to demand U.S. banking institutions to put more into insurance for the FDIC to protect the whole nation's deposits in banks. The banks that have more in assets than other banks will put more into the insurance fund. This is not for those with more deposits though. Generally, those institutions which pose the greatest risk to the U.S. financial system due to high-risk assets and less stable liquidity could be incurred more.

Startlingly, the insurance fund has run in the red for some time, going as low as $15.2 billion in the hole during the height of financial institution closures and bailouts. On the bright side, by the end of the third quarter 2010, the deficit had been cut almost in half to $8 billion.

Less paid for by small banks though

Based on small bank trade group the Independent Community Bankers of America, 98 % of banks that possess less than $10 billion in assets will pay less money to the insurance fund, due to various rule changes. About $4.5 billion will be saved by littler U.S. banks in the next three years, reports the ICBA.

“ICBA led the charge throughout the Wall Street reform debate to create fairness within the deposit insurance system so that Main Street community banks can continue to serve their customers and keep money where it belongs – in the community,” said chairman James MacPhee.

The need to strengthen

The FDIC fund will be able to become good again, says Blair, with the greater deposit insurance contributions. This will cause more foreseeable rates for unsecured loans. Banks will count on it.

“The financial crisis provided ample evidence of the need to improve the assessment system," said Bair. "The banking industry, the Deposit Insurance Fund and the financial system will benefit from this rule in both the short and long term.”

Citations

USA Today

usatoday.com/money/companies/management/2011-02-07-fdic-exec-pay_N.htm?csp=34money&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+UsatodaycomMoney-TopStories+%28Money+-+Top+Stories%29

Housing Wire

housingwire.com/2011/02/07/fdic-to-base-insurance-charges-to-banks-based-on-risk-not-deposits

Imagine all the bankers living for less pay

youtube.com/watch?v=uesCu3VVR4E