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Deposit Curbs May Imperil Weak Banks

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"A looming federal rule to cap the interest rates paid by weak banks could accelerate their demise and make life even harder for depositors," according to the Wall Street Journal. "Banks deemed to be less than "well capitalized" by the Federal Deposit Insurance Corp. won't be allowed, starting Jan. 1, to pay more than 0.75 percentage point above the U.S. average. Just 4% of the nation's 8,185 federally insured banks weren't well-capitalized as of June 30. But weaker banks "drive up costs for the rest of the industry" by offering unusually high rates to lure deposits, FDIC Chairman Sheila Bair said when the rule was announced in May."