"FDIC Proposes Interest Rate Limits to Aid Liquidity" wrote Bloomberg last week. The article says, "The FDIC recommended banks be limited in tapping higher-cost sources of funds, such as brokered deposits, and be barred from paying rates that exceed a national average plus 75 basis points. The agency also said premiums paid to insure deposits should be based on risks faced by the banks that fail to meet regulatory requirements." It quotes FDIC Chairman Sheila Bair, "The idea is to prevent these banks from acting in a way to compound losses to the FDIC. Our expectation and intent is that the additional concreteness of this proposed rule would result in lower deposit rates being paid by a number of weak banks."
