The Federal Deposit Insurance Corp. is likely to ask banks to prepay at least $36 billion -- and perhaps more than $50 billion -- in industry premiums to shore up its shrinking deposit-insurance fund, financial-industry sources told FOX Business on Monday.

Sources described this as the leading proposal to bolster the fund, saying it is likely to be approved Tuesday when the FDIC board of directors meets to consider ways to restore the deposit insurance fund.

“In essence, you are taking from the banks what they are going to owe anyway,” one industry official said. “It gives [the FDIC] cash, which is what they need now.”

The fund has fallen to about $10 billion now from about $50 billion two years ago because the FDIC has taken over more than 100 failed banks in the financial crisis -- some small, but some that cost the insurance fund more than $1 billion each. Some analysts predict another 100 to 200 banks -- or more -- could fail before the economy recovers.

The proposed prepayments -- for premiums due for three years -- would allow the FDIC to avoid other potentially problematic fixes for the fund, including borrowing money from healthier banks -- an idea FDIC has floated in recent weeks, but one that that raised conflict of interest questions because of the agency’s role as a bank regulator. 

Premium prepayments would also allow the FDIC to avoid tapping its credit line with the Treasury Department, a move that could be seen as another government bank bailout.

“We’re paying for it,” the industry source emphasized.

The deposit-insurance fund backs about $5 trillion in consumer deposits in the U.S. banking system.

Congress has approved a permanent increase in Treasury’s credit line to the FDIC of $100 billion, from $30 billion, but also gave Treasury temporary authority to loan the agency up to $500 billion on an emergency basis.

Another idea -- a new special assessment on banks -- is not popular with industry executives or their representatives in Congress as firms struggle to return to financial health. A new assessment would further eat into emerging industry profits and into bank capital, sources said.

Some banks -- especially community banks -- face additional losses and writedowns because of souring commercial real estate loans.

The prepayment plan is expected to be levied at standard premium levels, and prepaid premiums would become an asset on bank balance sheets to be amortized over three years. 

The sources said standard industry premium payments are projected at $12 billion annually over the next three years, or $36 billion.

The FDIC approved a special assessment on banks earlier this year to bolster the deposit fund, raising industry premiums to $18 billion for the year. Industry sources said that depending on future bank failures and resulting demands on the fund, the FDIC could extend the special assessment into future years, potentially boosting the prepayments to $54 billion over three years.

The FDIC is expected to approve hardship waivers for banks that might have trouble making the payments, the sources said.

Sources said that banks were reacting with “sticker shock” at the prospect of the earlier premium payments, but that they could accept the plan to avoid new special assessments.  The sources also said that with bank lending down because of tighter lending standards and loan demand down in the weak economy, many banks have the cash to make the prepayments.

FDIC Chairman Sheila Bair listed the prepayment plan in a speech at Georgetown University two weeks ago as one of several options the agency was considering to boost the insurance fund.

During panel discussion Friday at the Clinton Global Initiative conference in New York, Bair suggested that the industry would be called on to fix the fund.

"There is some discipline to be gained by continuing to press the industry to support the Deposit Insurance Fund," she said, according to a report in American Banker. "In terms of containing risk going forward, it is good for the industry to absorb and deal with the losses that we are having to assume now as a result of bank closings which came from things like too much commercial real estate concentration and unaffordable mortgage loans being made."