FDIC Issues Final Rule on Recapitalization of its Insurance Fund

As required by the Dodd-Frank Act, the FDIC today finalized a rule to increase the deposit insurance fund from 1.15 percent of insured deposits to 1.35 percent by 2020.

Under a rule adopted in 2011, assessment rates for all banks will decline by 2 or more basis points the quarter after the fund reaches 1.15 percent, which is anticipated for the second quarter of 2016 (possibly the third quarter if insured deposit growth exceeds expectations). Under today’s rule, starting that same quarter, banks under $10 billion will accrue credits for the portion of their assessments that contribute to growth of the fund above 1.15 percent. Banks will be allowed to use their credits without limit to cover assessments once the fund reaches 1.38 percent — a provision incorporated into the final rule following comments by ABA.

At the same time, the rule requires banks with over $10 billion in assets to pay 4.5 basis-point annual surcharge assessments until the fund reaches the 1.35 percent target, or until the fourth quarter of 2018. If needed, there will be a one-time “shortfall assessment” in the first quarter of 2019 to bring the fund to 1.35 percent.