March 6 (Bloomberg) -- TCF Financial Corp., the second- largest bank based in Minnesota, never made a subprime loan and hasn’t lost money since 1995, so its top executive is asking why the company should help clean up a mess left by larger rivals.
“I’m kind of bitter,” said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.’s fund that guarantees bank deposits. “We pay for the excesses of our competitor over and over again.”
TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.
Smaller banks are rebelling against the costs, as well as curbs on pay and business practices imposed on recipients of U.S. capital after public outrage over bonuses and perks at the biggest lenders. Community banks, which rely more heavily on deposit funding than peers like Citigroup Inc. and Wells Fargo & Co., suffer a “much heavier burden” as a result of deposit insurance “proportional to size,” Fine said.
The lenders “are feeling like they are paying for the incompetence and greed of Wall Street,” Fine said this week in an interview.
The ICBA is encouraging its 5,000 members to flood the FDIC with letters protesting the emergency fee. Fine said he’s received more than 1,000 e-mails and telephone messages from angry bankers since the FDIC approved the fee on Feb. 27.
‘Worse Than Terrible’
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