Lilguy

U.S. banks may be forced to continue replenishing the FDIC's insurance fund through 2013, Fox-Pitt Kelton analysts say in a note this morning. FDIC's deposit insurance fund, which protects more than $4.5T, currently faces a $45B shortfall.

"Forced"??? Screw'em!

Instead of paying an increased insurance fee, give the banks the option of dropping out of the FDIC and see how many depositors stick around. And, since they would no longer be serving the primary banking function--taking deposits & making loans--kick them out of the ranks of banks that are so thoroughly protected by the USG.

If I had my druthers, the FDIC insurance premiums would be progressive--and progressive in two dimensions: the size of overall assets (official over-inflated book value) and inversely to the ratio of deposits to assets (low ratio, high premium). So a bank with $10B in assets & $1B in deposits would pay a higher premium than a similarly sized bank with $3B in deposits or a smaller bank with a similar deposit/asset ratio.

While this would not "force" banks to move more to banking--vice securitization--activity, it would put the premium cost where the risk is.