Today, the FDIC Board convened a roundtable discussion on implementing the Deposit Insurance Fund (DIF) assessment provisions of Dodd-Frank (see FSM Report DEPOSITINSURANCE87), following the orderly resolution roundtable on August 31 (see Client Report SYSTEMIC33). The FDIC plans to issue rules on large-bank assessments by year-end, a move sure to begin the asset-based assessments and other provisions costly to large institutions mandated by the new law.  Staff indicated that a rule is being drafted, but few details on it were discussed.  Discussion at the roundtable centered on FDIC-staff analysis presenting four assessment scenarios and tracking the effects of a significant economic downturn to the DIF.  The goal is to prevent procyclicality.  Chairman Bair observed that the fundamental policy issue is whether to impose a steady premium at a relatively low rate while allowing the DIF reserve ratio to increase up to 2 or 2.25 percent over a long time period.  Bank representatives were broadly supportive of the policy, highlighting the ability to predictably budget for the costs of the assessments.  Attendees also encouraged a more risk-based assessment system, allowing banks to manage DIF assessments through changes to business practice.  This report analyzes today’s session.

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