Gruenberg: Deposit fund assessment proposal coming in May

The FDIC estimates that the cost of resolving Silicon Valley Bank will likely be $20 billion, which will be recovered by a special assessment on banks, FDIC Chairman Martin Gruenberg said today. In prepared testimony released ahead of two congressional hearings this week on the recent bank closures, Gruenberg did not say what form the assessment would take or which institutions would be required to pay. The agency will put forward a proposal for comment in May, he said, along with a report following a “comprehensive review of the deposit insurance system.”

The cost for resolving Signature Bank is estimated at $2.5 billion, Gruenberg said. Both cost estimates are subject to change depending on the ultimate recoveries for each receivership.

Gruenberg also emphasized that the U.S. banking system remains sound despite recent events. “The FDIC has been closely monitoring liquidity, including deposit trends, across the banking industry,” he said. “Since the action taken by the government to support the banking system, there has been a moderation of deposit outflows at the banks that were experiencing large outflows the week of March 6. In general, banks have been prudently working preemptively to increase liquidity and build liquidity buffers.”