Small lenders criticise FDIC scheme

The Financial Times reports:

The Federal Deposit Insurance Corporation may on Friday revise a $1,400bn programme to guarantee bank debt on concerns the scheme could undermine the market for overnight loans between banks and unfairly disadvantage community lenders.

In more than 300 comment letters filed in response to the FDIC’s proposed rules, banks argued that the terms of the agency’s plan were too complex, too expensive and overly punitive for institutions that chose not to participate.

The fiercest critics were small community banks, many of which argued their financial positions remained strong and they would be unfairly disadvantaged by rules designed to solve a crisis created by their big bank brethren.

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