First, merging the funds. That s no surprise. We ve urged a merger for years. It is the only way to assure that you are not paying 23 basis points for deposit insurance while your competitor across the street is paying nothing. Second, eliminating the hard target reserve ratio.
Premiums are very high or they are zero for almost all banks.
And that makes the down side of the business cycle worse. Eliminating the hard target would allow the insurance fund to absorb losses in bad times, so that earnings and capital are not drained from banks when they are needed the most and when bank lending is needed the most. On pricing, if we are going to draw down the fund in bad times, it means that we must build it up in good times. And that means charging some premiums. Steadier premiums would allow you to plan and manage better.