Trade groups: Data argues against deposit insurance assessment rate hike

The American Bankers Association and five trade associations reiterated their opposition to a proposed two basis-point increase in deposit insurance assessment rates in comments submitted to the FDIC today, this time citing new deposit data they say shows the increase is unwarranted.

FDIC signaled in June its intent to raise assessment rates starting during the first quarterly assessment period of 2023. The six associations previously voiced concerns about the proposal in comments filed in August. Since then, the agency has published its most recent Quarterly Banking Profile, which shows that declines in deposit levels—including insured deposit levels—are well underway, the groups said in their follow-up letter. The groups also said that rising inflation and interest rates will likely further slow insured deposit growth, and that pursuing an assessment rate increase amid those other economic stressors will harm the economy.

“The most recent data makes the case against an imminent increase to deposit insurance assessment rates even more compelling and we encourage the FDIC not to implement one at this time,” the groups said.