WASHINGTON (AP) — The head of the Federal Deposit Insurance Corp. has agreed to halve a new emergency fee on U.S. banks in exchange for Congress more than tripling the agency's borrowing authority to tap federal aid if needed to replenish the deposit insurance fund.

Word of the move by FDIC Chairman Sheila Bair came Thursday, four days after she warned that the fund insuring Americans' deposits could be wiped out this year without the new fees on U.S. banks and thrifts. Banks, especially smaller community banks, have been chafing over the new insurance fees, saying they will place an extra burden on an already struggling industry.

Bair is agreeing to cut the new emergency premium, to be collected from all federally-insured institutions on Sept. 30, to 10 cents for every $100 of their insured deposits from the 20 cents the FDIC approved last Friday. That compares with an average premium of 6.3 cents paid by banks and thrifts last year.

At the same time, the FDIC has been seeking a permanent increase in its line of credit with the Treasury Department to $100 billion from the current $30 billion. The agency has never drawn on that long-term credit line, but Bair told lawmakers in letters Thursday that such an increase "would leave no doubt that the FDIC will have the resources necessary to address future contingencies and seamlessly fulfill the government's commitment to protect insured depositors against loss."

Housing rescue legislation headed for approval by the House on Thursday includes the boosted borrowing authority for the FDIC.

In the Senate, Banking Committee Chairman Sen. Christopher Dodd, D-Conn., has authored legislation that would make the same change. He was expected to introduce the measure soon.

In a letter to Dodd Thursday, Bair said raising the credit line to $100 billion "would give the FDIC flexibility to reduce the size" of the emergency premium to be charged to banks.

Dodd spokeswoman Kate Szostak and FDIC spokesman Andrew Gray declined to comment.

The twin moves "are important for maintaining a strong deposit insurance fund while also ensuring that banks can continue to meet the credit needs of their communities," Edward Yingling, president and CEO of the American Bankers Association, said in a statement.

"We remain deeply concerned about (the cost of the new premium) and appreciate the FDIC's willingness to consider alternative approaches," he said.

As the economy sours, home prices tumble and loan defaults soar, bank failures have cascaded and sapped billions out of the fund that insures regular accounts up to $250,000. The fund now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The law requires the insurance fund to be maintained at a certain minimum level, but it fell below the mandated 1.15 percent of total insured deposits in mid-2008.

The FDIC now expects that bank failures will cost the insurance fund around $65 billion through 2013, up from an earlier estimate of $40 billion. There have been 16 bank collapses already this year, following 25 in 2008 — which included two of the biggest savings and loans, Washington Mutual Inc. and IndyMac Bank.

The new emergency premium approved last week, plus an increase in regular insurance fees for banks, was intended to raise $27 billion this year to replenish the fund. The regular insurance premiums will rise to between 12 and 16 cents for every $100 in deposits starting in April, up from a range of 12 to 14 cents.

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