FDIC to Tighten Interest Rate Restrictions on Institutions That are Less Than Well-Capitalized

Below is a partial notice released by the FDIC.  Were less that stable banks offering higher than average rates of returns?  If memory serves me correctly both Indymac and Washington Mutual were offering accounts at a return of approximately 5% before their demise.  The bigger question in my mind is:  If there are only 154 problem banks out of the 8,300 nationwide why is the government concealing their identity?  With the lack of faith in the entire banking community wouldn’t the country be better served with FULL DISCLOSURE?
 
Prompt Corrective Action requires the FDIC to prevent banks that are less than Well Capitalized from soliciting deposits at interest rates that significantly exceed prevailing rates. The proposed regulation would define nationally prevailing deposit rates as a direct calculation of those national averages, as computed and published by the FDIC based on data available to it. Reliance on the Treasury yields in the regulation would be discontinued. The expectation is that this additional concreteness would result in lower deposit rates being paid by a number of banks that are less than Well Capitalized and closer adherence to the statute.”
The proposed rule applies only to the small minority of banks that are less than well capitalized. As of third quarter 2008, there were 154 banks that reported being less than Well Capitalized, out of more than 8,300 banks nationwide.

 

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