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New FDIC Rules Making it Tougher on Bank Start-Ups


Last Friday the fifth Atlanta-area bank of 2008 was seized by the FDIC. Apparently, the FDIC has taken notice. According to this MSNBC article, the FDIC may be implementing what is effectively a ban on new banks in metro Atlanta and other distressed areas nationwide. There's no official ban, and the FDIC denies even an informal ban, but the FDIC is becoming more discriminating in who it approves nationwide.

The article describes some of the tougher guidelines that the FDIC is implementing in the bank approval process. Here's one that I found interesting:
banks are required to present a plan to generate deposits from the wider community, beyond the so-called "friends and family" of the organizing group.

One way bank start-ups can meet this requirement is to embrace the internet. Make it easy for people to apply and fund the accounts online. Provide an online interface that allows easy and fast electronic deposits and withdrawals. With so many online savings accounts, it's hard to compete. However, there are still not many internet reward checking accounts. I just reported on one Saturday from a new internet bank that claims opening the account can be done totally online.

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