ABA Urges Changes to FDIC DIF Assessment Approach

ABA yesterday urged the FDIC to consider an alternate approach in how midsize and large banks will be assessed to recapitalize the Deposit Insurance Fund. The agency’s proposal is intended to implement Section 334 of the Dodd-Frank Act, which calls for banks with over $10 billion in assets to be responsible for recapitalizing the DIF to 1.35 percent of insured deposits after it reaches a 1.15 percent reserve ratio.

For banks with over $10 billion, ABA recommended that the 4.5 basis point surcharge assessments be stretched out through the third quarter of 2020, as provided by Congress. For smaller banks — which under the proposal would receive credits for any amount above their share of the assessments needed to maintain the fund at a 1.15 percent reserve ratio — ABA urged the FDIC to make the assessment credits transferable, usable without limit, available sooner than proposed and not subject to FDIC assessments.

With the fund expected to be at 1.15 percent in the first quarter, the proposed rule could go into effect as soon as the second quarter of 2016. For more information, contact ABA’s Rob Strand.