FDIC Moves to Boost Assessments on Large Banks

This is a good thing. If banks are too big to fail, then their insurance costs should reflect this:

The Federal Deposit Insurance Corp. proposed shifting the burden for protecting depositors against bank failures toward larger lenders whose reliance on riskier funding sources may pose a greater threat to the financial system.

The FDIC board today approved two proposals for overhauling assessments for its deposit insurance fund, including one that would base the fees on banks’ liabilities rather than their domestic deposits. The fee proposal, a response to the Dodd- Frank financial-regulation law, would increase assessments on banks with more than $10 billion in assets.

“This proposal achieves the goals of the Dodd-Frank Act to change the assessment base to better reflect risks to the deposit insurance fund,” said FDIC Chairman Sheila Bair. The measure is subject to a 45-day comment period.

If we make too big to fail too expensive to exist, I can live with that.