FDIC issues final special assessment to recover Deposit Insurance Fund losses

The FDIC today approved a final special assessment to recover the hit to the Deposit Insurance Fund resulting from the agency’s decision to protect uninsured depositors following the Silicon Valley Bank and Signature Bank failures. The assessment will be collected at an annual rate of approximately 13.4 basis points—3.36 basis points quarterly—for an anticipated eight quarterly assessment periods. No bank with total assets below $5 billion will pay the assessment, as it is aimed at banks that benefited most from the assistance provided under the FDIC’s systemic risk determination, the agency said in a statement.

Out of the $18.7 billion hit to the DIF, approximately $16.3 billion was attributable to the protection of uninsured depositors, according to the FDIC. The agency originally estimated the loss attributable to covering uninsured depositors at $15.8 billion. The loss estimates will be periodically adjusted as assets are sold, liabilities are satisfied and receivership expenses are incurred, it added. The agency estimates that 114 banks will be subject to the special assessment, which will be collected beginning with the first quarterly assessment period of 2024.

In a statement, American Bankers Association President and CEO Rob Nichols said the association recognized the FDIC’s challenge in crafting the assessment and appreciated its decision to exempt most community banks. However, he expressed disappointment that the final cost of the assessment increased, and said that ABA still has concerns with some aspects of the resolution process and the methodology underlying the assessment. “In addition, we continue to caution against the FDIC’s disproportionate focus on uninsured deposits, a category that comprises a diverse set of depositors that is not by itself a proxy for risk,” he said. “We also believe that this special assessment should not set a precedent for future special assessments.”

The FDIC board approved the assessment via notational vote after a scheduled public meeting of board members was canceled. Nichols said the vote would have benefited from an open meeting “and the chance for the public to hear from board members directly.”