CHAIRMAN POWELL RALLIES THE TROOPS
In his first address before an ICBA audience, FDIC Chairman Powell received a warm welcome from the bankers assembled in Honolulu as he urged them to become personally engaged in the deposit insurance reform debate. Bankers must communicate their views to the Congress in order move legislation forward, he said. Referring to the recent approval of the deposit insurance reform legislation by the House Financial Institutions and Consumer Credit Subcommittee, Chairman Powell said, "We have just made it to first base. I don't want to get tagged out at second."
Chairman Powell told the audience that increasing deposit insurance coverage levels is an important component of deposit insurance reform. "I am very committed to increase coverage levels," he said. Referring to inflation's effect on coverage, Powell said, "It's important to recognize today that the coverage is not really $100,000. Coverage is $47,000. And if we don't do something about it, it's going to continue to deteriorate."
Powell also emphasized the importance of the FDIC being able to charge small, steady, regular premiums; provide credit assessments; charge those who have not paid premiums in the past; and, within parameters and with accountability, manage the fund to avoid large fluctuations in premiums. He noted that the pending legislation in the House gives the FDIC the authority to assess high growth banks to address the free rider problem. He said one, two or three expensive failures in the next six months could bring the BIF reserve ratio down below the 1.25 percent level, forcing the FDIC to follow the law and assess premiums.
The ICBA Executive Committee responded to Powell's remarks by joining him on stage. "We join FDIC Chairman Powell to demonstrate the ICBA leadership's commitment to two goals: to strengthen public confidence in our financial system by strengthening the FDIC, and to secure the passage of comprehensive, balanced federal deposit insurance legislation in this Congress," ICBA Chairman Bob Gulledge said. "Let us individually commit to carry this torch back to our communities. Light the fire in the hearts and minds of your directors, your employees and your customers. Let's get them to help us carry the flame to Washington."