Senator Tim Johnson, (D-SD), the Chairman of the Financial Institutions Subcommittee, will hold the first in a series of hearings examining comprehensive deposit insurance reform. Johnson has expressed concern about the pro-cyclical nature of FDIC's coverage system. Currently, 92% of insured depository institutions pay nothing for insurance coverage. Institutions would be assessed very high premiums, however, if the current insurance fund were to drop below a 1.25% reserve ratio, something that could happen in the event of worsening economic conditions.

Johnson said he expects the hearings to address the related concern of insured deposit limits. He is also concerned that a recent surge in insured deposits has caused the current fund ratios to drop, raising the threat that banks and thrifts could be forced to ante up for insurance premiums if the trend continues.

The hearing on "Comprehensive Deposit Insurance Reform: Responses to the FDIC Recommendations for Reform" will take place:

Scheduled to testify before the Subcommittee are:

• Mr. Curtis L. Hage, First Vice-Chairman of the American Community Banker, and President of Home Federal Savings Bank, Sioux Falls, South Dakota;
  
• Mr. Jeff Plagge, President and CEO of the First National Bank of Waverly, Iowa, representing the American Bankers Association; and
  
• Mr. Robert I. Gulledge, Chairman, President and CEO, Citizens Bank, Inc., Robertsdale, Alabama, testifying on behalf of the Independent Community Bankers of America.