Thank you, Mr. Chairman.
First I want to thank you for holding this hearing. I believe it's important that we continually evaluate the status of the deposit insurance system. It's crucial to the stability of our banking system to not watch over it as closely as possible.
I also want to thank our distinguished witnesses who are with us today. Your knowledge and background in dealing with these issues will help us immensely as we continue to work on this issue.
As everyone knows, the House Financial Services Committee passed its version of deposit insurance reform last week, and I think it's important that this Committee keep pace on this critical issue. I want to thank Senator Johnson for allowing me to work with him on his legislation. I believe that what he, Senators Reed, Hagel, and myself have crafted provides the Committee with an excellent starting point to examining changes to the current deposit insurance system.
I am very pleased because I think a number of issues can be agreed upon by nearly everyone, and I would hope that the few remaining issues don't prevent us from making needed changes as soon as possible. This legislation is too important for banks, not only in Wyoming, but across the country to let it get stalled.
S. 1945 addresses a number of problems with the current system. It merges the BIF and SAIF account, which I believe is widely supported. The legislation also requires mandatory risk-based premiums, because all institutions, no matter how well managed, offer some risk to the funds, they should all pay some amount into it. The legislation also allows the FDIC to have more flexibility when assessing premiums. The bill eliminates the hard target of 1.25 %, in favor of letting the FDIC manage the funds within a range of 1 to 1.5 %. This clarifies that in good economic times, it would be appropriate for the FDIC to increase reserves, so that in recessionary times, FDIC could relieve pressure on banks by allowing the ratio to float down until it is more comfortable for banks to replenish the fund. The bill also specifies that wide swings in assessment rates should be avoided.
Again, I believe this issues is of critical importance. I thank you Mr. Chairman for holding this hearing, and I look forward to working with you and other Members of the Committee as we continue working on this issue.