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.
The full report is available to retainer clients. To find out how you can sign up for the service, click here.