Tabs

Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
 
Qualified Mortgage - Qualified Residential Mortgage
Swaps
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Capital
Deposit Insurance
Interchange
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Preemption
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Appraisals
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Friday, January 22, 2016

FDIC Revises Proposal on Assessments for Banks Under $10B

The FDIC issued a revised proposed rule for assessing deposit insurance premiums on banks with under $10 billion in assets. The proposal incorporates several of ABA’s recommendations on the earlier proposal issued last July, including the elimination of an assessment penalty for funding with reciprocal deposits or Federal Home Loan Bank advances. ABA Senior Economist Rob Strand said:

We appreciate that the FDIC considered all of our issues with the earlier proposal and incorporated several of our suggestions. We are evaluating the latest version to see if it now fairly allocates assessments by risk.

In response to numerous comments from bankers across the country, the revised proposal would not factor core deposit funding into assessments (which would punish banks for funding with reciprocal deposits or Federal Home Loan Bank advances). Under the updated proposal, funding with brokered deposits — not counting reciprocal deposits for well capitalized banks with CAMELS ratings of 1 or 2 — in excess of 10% of assets would lead to higher assessments (and the existing “brokered deposit adjustment” would be eliminated).

As supported by ABA, the revised proposal would also adopt a fairer standard for assessing growth; assets would have to grow more than 10% over a one-year period to trigger higher assessments, meaning that fewer banks will be penalized for healthy, well-managed growth.

The new proposal would not alter the loan portfolio factor from the earlier proposal, which ABA criticized as being “of questionable value” in forecasting bank failures, since it does not account for the quality of credit underwriting, portfolio management and risk hedging. However, the proposal would cap assessment rates by CAMELS rating, which ABA supported, potentially limiting the impact of the loan portfolio factor and the weighting for the tier 1 core capital ratio, which ABA also objected to earlier.

The FDIC will accept comments on the proposal for 30 days following publication in the Federal Register, and posted a calculator for bankers to test the impact on their assessments.

Read more.
Access the calculator.

No comments:

Post a Comment

Please read our comment policy before making a comment.