FDIC Issues Proposal on Assessment Credits

The FDIC today proposed to amend its rule that determines when assessment credits can be used. As proposed, after the FDIC insurance fund grows to 1.38 percent of insured deposits, credits will be applied against assessments as long as the fund exceeds 1.35 percent, instead of 1.38 percent as at present. Any credits left after eight quarters would be remitted directly to the banks.

Under a provision of the Dodd-Frank Act, banks with less than $10 billion in assets were not held responsible to recapitalize the FDIC insurance fund from 1.15 percent to 1.35 percent. After the fund reached 1.35 percent last September, the FDIC calculated that $764 million of premiums paid were due back to below-$10 billion banks, and accordingly allocated assessment credits to be used against future assessments.

The fund was at 1.36 percent in March and could reach 1.38 percent this year. The proposed change would allow banks with residual credits to use them, should an increase in FDIC expenses drop the fund below 1.38 percent. Comments on the proposal will be due 30 days after publication in the Federal Register.