WASHINGTON (TheStreet) -- The Federal Deposit Insurance Corp. seems poised to hurt small, healthy banks in an effort to keep small, sickly ones alive.
The FDIC's deposit insurance fund is in trouble, with reserves having sunk to a mere $10.4 billion at the end of last quarter. At the same time, the list of "problem" banks has climbed by more than one-third to 416, as dozens of banks have crumbled and others were acquired by stronger competitors.
To replenish its coffers, the FDIC can ask Congress for more money, tap into a $100 billion credit line from the Treasury Department or continue to assess higher fees to the industry, as it did last quarter. The New York Times reported on Tuesday that Chairwoman Sheila Bair is leaning toward the last option and also may borrow funds from healthy banks on a short-term basis to rescue weaker counterparts.
While boosting insurance-fund fees has crimped the profits of big banks like Bank of America