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Dugan Hedges on FDIC Plan
Leave it to Comptroller of the Currency John Dugan to hedge his bet on the Federal Deposit Insurance Corp. plan to replenish its deposit insurance fund with prepaid bank assessments.
That would be the same John Dugan who maimed the reverse mortgage business earlier this year with one headline, by the way.
So what does Dugan think of the plan?
“I think this is a very positive proposal.”
and
“The only potential downside of this, it seems to me, is that the cash provided to the FDIC will not be available to make loans. Given the size of the amount we are seeking – $45 billion spread out over the multi-trillion banking industry, which has over $13 trillion in assets – this may not be likely to have a material effect on credit availability. Indeed, a number of banks argue that liquidity is plentiful and is not a lending constraint. I think those are all fair points, but I think this is an important question and hope we get comment on it, which I will review very carefully before making a final decision.”
The “only potential downside”? Uh, that’s a $45 billion downside, Mr. Comptroller. But at least he hedged his bet.
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