The American Bankers Association yesterday welcomed the FDIC’s proposal to set how it applies deposit insurance assessment credits and urged the FDIC to “return the credit funds as expeditiously as is feasible to those banks to which they are due.” ABA added that “the credits will serve a better purpose when disbursed to these banks where these funds can support the institutions’ lending and liquidity.”
In August, the FDIC proposed to amend its rule that determines when assessment credits can be used. As proposed, credits will be applied against assessments as long as the fund exceeds 1.35%, instead of 1.38% as at present. ABA supported this change and recommended further that any credits left after four quarters should be remitted 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% to 1.35%. After the fund reached 1.35% in September of 2018, 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. For more information, contact ABA’s Rob Strand.