The FDIC board has proposed to roughly double the assessments that banks pay for deposit insurance. The proposal implements the agency’s new plan for restoring the Deposit Insurance Fund (DIF) to the level of reserves mandated by law.

Under current FDIC rules, banks pay anywhere from five basis points to 43 basis points for deposit insurance, based on a rating system that takes into account each bank’s capital adequacy and management strength. Over 90 percent of insured banks pay fees in the range of five to seven basis points.

Under the proposal, the assessment rate schedule would be raised uniformly by 7.0 basis points (annualized) beginning on January 1, 2009. Banks as a group now pay an average of 6.3 basis points for insurance coverage; under the proposal, that figure would rise to 13.5 basis points from April through December 2009 and 12.6 basis points beginning in January 2010.

In addition, beginning with the second quarter of 2009, the FDIC would change the deposit insurance assessment system to charge riskier institutions more. The proposal would assess higher rates to institutions with a significant reliance on secured liabilities, such as borrowings from the Federal Home Loan Banks. It would also assess higher rates for institutions with a significant reliance on brokered deposits but, for well-managed and well-capitalized institutions, only when accompanied by rapid asset growth.

“Like any insurance company, we’ve identified activities that have increased or reduced the cost of insurance, and as a result, want to factor them into our determination of assessment rates,” FDIC Chairman Sheila Bair said.

Banks generally recognize that the DIF needs shoring up, so the proposal is likely to win reluctant support from the industry. However, several details garnered criticism. Some community banks questioned the need to raise premium payments for institutions that utilize the Federal Home Loan Banks’ secured lending programs, which many rely on as a source of liquidity.

Likewise, bank lobbyists argued that the proposal to raise fees for institutions with brokered deposits will apply even to the use of brokered deposits as part of sweep account arrangements — not necessarily a hazardous practice.