The FDIC should defer collection of the special assessment imposed on certain banks following the failures of Silicon Valley Bank and Signature Bank, which would give more time for litigation to play out regarding the recovery of losses caused by the closures, the American Bankers Association said in a letter to the agency.
In 2023, the FDIC adopted a special assessment to be collected at an annual rate of approximately 13.4 basis points — 3.36 basis points quarterly — for an anticipated eight quarterly assessment periods, with the revenue used to recover the losses to the Deposit Insurance Fund caused by the bank closures. The assessment was only applied to banks with at least $5 billion in uninsured deposits as of the fourth quarter 2022.
In a December vote, the FDIC board lowered the assessment to 2.97 basis points for the eighth assessment quarter. ABA welcomed the decision to lower the assessment but said further adjustments were needed “to ensure alignment with declining and uncertain loss estimates.” It recommended the FDIC pause collection of the assessment during the eighth quarter while the litigation plays out, or just collect half of the planned assessment.
“This approach would ensure precision and fairness, avoiding unnecessary liquidity burdens while aligning with the principle of minimizing overcollection,” ABA said.
