US Deposits are a safer, less volatile way to fund banks’ balance sheets than capital markets. That is the message the Obama administration intends to deliver to the US financial system in crafting a levy to pay for the cost of the crisis.
People familiar with the matter said on Wednesday that the government will set its bank fees based on their total assets, minus insured deposits and shareholders equity. In other words, the more a financial institution depends on commercial paper and other forms of wholesale funding, the more it will pay. This formula might place a greater burden on institutions such as Goldman Sachs, which have large securities businesses that cannot be funded by insured deposits, as well as those consumer lenders that never built up a deposit base to match the growth in their loan portfolios.
