) -- The

Federal Deposit Insurance Corp.

on Tuesday proposed a plan to restore its fund as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Dodd-Frank act requires the FDIC to restore the deposit insurance fund's reserve ratio to 1.35% of total industry deposits by September 20, 2020. The agency previously reported that the deposit insurance fund had a negative balance of $15.2 billion as of June 30, improving from a negative $20.7 billion the previous quarter.

The agency also has a contingent loss reserve to cover expected bank and thrift failures. The reserve balance was $27.5 billion as of June 30.

There have been 132 bank failures so far during 2010, and 297 since the current wave of bank closures began in 2008. All are detailed in


interactive bank failure map:

Image placeholder title

The bank failure map is color-coded, with the states having the greatest number of failures highlighted in dark gray, and states with no failures in light green. By moving your mouse over a state you can see its combined 2008-2010 totals. Then click the state to open a detailed map pinpointing the locations and providing additional information for each bank failure.

Lower Deposit Insurance Premiums

The FDIC had previously planned to implement a 3 basis point insurance premium assessment increase to banks and thrifts on their deposits on January 1, 2011, but the new plan will keep deposit premium assessments at their current levels. The agency's board of directors made this decision based on new projections of lower-than-expected losses from bank failures from 2010 through 2014.

Under the new plan, the "long term, minimum" goal will be for a deposit insurance reserve ratio of 2% and the agency will lower assessment rates for banks and thrifts once the reserve ratio reaches 1.15%, so that the average assessment rate will be 8.5 basis points.

Instead of paying dividends to banks and thrifts during times of minimal losses from bank failures, the agency will adopt lower deposit insurance rate schedules when the reserve ratio reaches 2% and 2.5%, so that average assessment rates will decline 25% and 50%, respectively.

FDIC chairman Sheila Blair said the agency was "trying to give the industry greater certainty regarding what rates will be over the long run," adding that "The trade off we are proposing is lower, more stable and predictable premiums, but a higher reserve."

After the plan is published in the Federal Register, there will be a 30-day comment period

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Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.