LETTER TO BOTH U.S. HOUSE AND SENATE BANKING
COMMITTEES REGARDING FDIC - July 16, 2008

I am writing to urge you to take immediate action to address the funding deficiency in the Federal Deposit Insurance Corporation (FDIC) in order to protect the hard-earned savings of everyday Americans from the growing risk of wide-scale bank failures in the United States.

Congress created the FDIC in 1933 in response to the thousands of bank failures that occurred during the early stages of the Great Depression. As you know, the FDIC is an independent agency of the federal government and is funded by premiums from member institutions and earnings from its investment account. According to its website, the FDIC's insures in excess of $3 trillion in customer deposits against FDIC assets of approximately $50 billion (before the impact of the takeover of IndyMac Bank, F.S.B. which, per estimates, will cost the FDIC between $6 billion and $8 billion).

Due to the over-the-counter derivative crisis that is affecting the solvency of hundreds, if not thousands, of financial institutions, my concern is that the FDIC's insurance fund is too small to adequately protect depositors. The leverage ratio of the FDIC is greater than 60 to 1. Fannie Mae and Freddie Mac operated using a similarly leveraged balance sheet and, as you know, on July 14, 2008, Fannie Mae and Freddie Mac required a financial rescue orchestrated by the Secretary of the Treasury and the Chairman of the Federal Reserve.

I urge you to lead the effort to fully fund the FDIC so that the deposits of millions of Americans are secure and the faith of our banking sector is fully restored and without question. Our financial system is in peril. Failure to fully protect depositors and restore the faith in our banking system will result in a severe economic downturn and will cause great harm to the American people. I urge you to act without delay.

Sincerely,

David H. Krikorian