FDIC Bill Dodges a New TARP Fight

Why do they need to do this? Perhaps the FDIC sees some huge failures ahead.-Lou

FDIC Bill Dodges a New TARP Fight

WASHINGTON -- A three-page bill designed to bolster the Federal Deposit Insurance Corp. could let the Obama administration sidestep a huge political problem: securing more financial firepower without opening a debate over the Troubled Asset Relief Program.

The legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur. Those funds would be distinct from the contentious $700 billion financial-sector bailout, which lawmakers are loathe to expand.

The FDIC can presently only borrow $30 billion from Treasury. The bill would permanently raise that level to $100 billion, which the FDIC could tap without prior approval from the Fed and Treasury.

Mr. Dodd, a Connecticut Democrat, already has four Republican co-sponsors for the bill and it could quickly gain momentum, in part because of strong backing by community bankers.

"I do not want [the FDIC] being timid," said Sen. Bob Corker, a Tennessee Republican who is one of the co-sponsors. "I want them to be aggressive, if they feel like a bank needs to be seized, to have the ability to do it."

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