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LETTERS : We Don't Pay for Failure

July 27, 1986

H. W. Anderson's letter of July 20 ("When Banks Fail, We Pay") makes the erroneous point that when the Federal Deposit Insurance Corp. pays a healthy bank to acquire a failed bank or retains doubtful loans of a failed bank, taxpayers indirectly bear the cost.

If the FDIC were funded with tax dollars, that would be an accurate point; however, the FDIC is not funded with tax dollars.

Rather, like any insurance company, it is funded by assessing insurance premiums against those it insures, i.e., the nation's approximately 14,000 banks at a rate, fixed by statute, of 1/12 of 1% of each bank's total deposits.

Therefore, it is false and misleading to suggest, as does your headline and Anderson's letter, that either "we pay" or "each U.S. citizen" pays "when a bank fails."

JULIUS L. LOESER

Los Angeles

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