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WASHINGTON-It is highly likely banks will be slapped with a premium on deposits in the first half of 2003, recent statements by Federal Deposit Insurance Corp. Chairman Don Powell indicated. While the National Credit Union Share Insurance Fund (NCUSIF) will probably fall below the reserve ratio set by the NCUA Board, it is not expected to fall below the statutory level requiring a premium be set. During an Institute of International Bankers luncheon Monday, Powell said there was a 75% chance that Bank Insurance Fund members would have to pay a premium on deposits in the first half of next year, according to American Banker. Powell warned banks of this possibility when the reserve ratio for the fund fell to 1.24% at the end of the first quarter for the first time in seven years, just one basis point below the statutory minimum. The most recent quarterly statistics will be released just after deadline, which is expected to show the reserve ratio still under the required 1.25%. A premium would not be announced until November. Powell encouraged bankers to lobby their members of Congress to pass the deposit insurance reform legislation (H.R. 3717), which has passed the House but has yet to move in the Senate. Senator Tim Johnson (D-S.D.), who introduced the bill and faces a tough re-election this year, is also anxious to see movement on the bill. His battle may pique the interest of fellow Democratic senator from South Dakota, Majority Leader Tom Daschle.

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