Rep. Gutierrez wants risky banks to pay insurance fees

An Illinois lawmaker has introduced legislation that would assess insurance premiums on banks and other financial institutions that engage in risky behavior.

Rep. Luis GutierrezLuis GutierrezRyan meets with Hispanic Caucus to talk Puerto Rico Report: Latino leaders plan Chicago protest against Trump Long lines keep casino workers from Nevada caucuses MORE (D-Ill.), the chairman of the Subcommittee on Financial Institutions and Consumer Credit, announced Tuesday that he'd introduce the "Bank Accountability and Risk Assessment Act of 2009," which he said would reduce stress on the Federal Deposit Insurance Corporation (FDIC) from banks deemed "too big to fail."

The law would assess insurance premiums on banks whose investments are deemed a risk to the FDIC's insurance fund, and would charge a systemic risk premium to institutions seen as risking the entire financial services sector. Those assessments would be based on institutions' total liabilities.

"The current assessment process for banks fails to account for systemic risks that the largest institutions present to the [Deposit Insurance Fund] and the taxpayers," Gutierrez said in a statement.

He also said the bill would help smaller banks with more conservative investments.

"The current assessment system disproportionately advantages the largest institutions at the expense of small banks," Guteirrez said. "While small banks pay insurance premiums on nearly their entire balance sheets, large banks pay on only half."

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