Today the Federal Deposit Insurance Corporation’s Board of Directors by notational vote approved: Final Rule on Special Assessment Pursuant to Systematic Risk Determination
Fact Sheet:
Press Release:
The Federal Deposit Insurance Corporation (FDIC) Board of Directors today approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund (DIF) associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
The Federal Deposit Insurance Act (FDI Act) requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023. Currently, the FDIC estimates that of the total cost of the failures of Silicon Valley Bank and Signature Bank, approximately $16.3 billion was attributable to the protection of uninsured depositors.
After careful consideration of the comments received on the proposal and analysis of the applicable statutory factors, the FDIC is adopting, as final, the proposed special assessment, with clarifications to promote transparency and a modification to allow for corrective amendments to estimated uninsured deposits associated with the FDIC’s review of an institution’s reporting methodology.
“The final rule applies the special assessment to the types of banking organizations that benefitted most from the protection of uninsured depositors, while ensuring equitable, transparent, and consistent treatment based on amounts of uninsured deposits,” said FDIC Chairman Martin J. Gruenberg. “The final rule also promotes maintenance of liquidity, which will allow institutions to absorb any potential unexpected setbacks while continuing to meet the credit needs of the U.S. economy.”
Under the final rule, the FDIC will collect the special assessment at an annual rate of 13.4 basis points beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024) with an invoice payment date of June 28, 2024, and will continue to collect special assessments for an anticipated total of eight quarterly assessment periods. The base for the special assessment is equal to an insured depository institution’s (IDI’s) estimated uninsured deposits for the December 31, 2022 reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits from the IDI, or at the banking organization level for IDIs that are part of a holding company with one or more subsidiary IDIs.
It is estimated that a total of 114 banking organizations will be subject to the special assessment, and no banking organizations with total assets under $5 billion will pay the special assessment, based on data for the December 31, 2022 reporting period.
Wut Mean?:
- The FDIC Board approved a final rule for a special assessment to recover losses to the Deposit Insurance Fund (DIF) due to the protection of uninsured depositors after the closures of Silicon Valley Bank and Signature Bank.
- This action is required by the Federal Deposit Insurance Act (FDI Act) following the systemic risk determination announced on March 12, 2023.
- The estimated cost attributable to protecting uninsured depositors from the failures of these banks is approximately $16.3 billion.
- The final rule adopts the proposed special assessment with clarifications for transparency and allows for amendments to estimated uninsured deposits based on FDIC's review.
- FDIC Chairman Martin J. Gruenberg stated the rule targets banking organizations that benefitted most from the protection of uninsured depositors, ensuring equitable treatment and maintaining liquidity.
- The special assessment will be collected at an annual rate of 13.4 basis points from the first quarter of 2024, with an invoice payment date of June 28, 2024, and is expected to continue for eight quarters.
- The assessment base is an insured depository institution’s (IDI's) estimated uninsured deposits as of December 31, 2022, with the first $5 billion in estimated uninsured deposits excluded.
- Approximately 114 banking organizations will be subject to the special assessment, and no organizations with total assets under $5 billion will pay, based on December 31, 2022 data.
TLDRS:
- The FDIC Board has approved a special assessment rule to recover $16.3 billion in losses to the Deposit Insurance Fund, caused by the protection of uninsured depositors following the closure of Silicon Valley Bank and Signature Bank.
- This measure, required by the Federal Deposit Insurance Act due to systemic risk concerns, will target banking organizations that most benefited from the uninsured depositor protection.
- The special assessment will be levied at an annual rate of 13.4 basis points from Q1 2024 and is anticipated to last for eight quarters, with the base being each institution's estimated uninsured deposits as of December 31, 2022, excluding the first $5 billion.
- Around 114 banking organizations will face this assessment, but no institutions with total assets under $5 billion will be charged, as per the data of December 31, 2022.
