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Wednesday, March 16, 2016

FDIC Issues Final Rule on Recapitalization of its Insurance Fund

As required by the Dodd-Frank Act, the FDIC finalized a rule to increase the deposit insurance fund from 1.15% of insured deposits to 1.35% by 2020.

Under a rule adopted in 2011, assessment rates for all banks will decline by 2 or more basis points the quarter after the fund reaches 1.15%, which is anticipated for the second quarter of 2016 (possibly the third quarter if insured deposit growth exceeds expectations). Under the finalized rule, starting that same quarter, banks under $10 billion will accrue credits for the portion of their assessments that contribute to growth of the fund above 1.15%. Banks will be allowed to use their credits without limit to cover assessments once the fund reaches 1.38% – a provision incorporated into the final rule following comments by ABA.

At the same time, the rule requires banks with over $10 billion in assets to pay 4.5 basis-point annual surcharge assessments until the fund reaches the 1.35% target, or until the fourth quarter of 2018. If needed, there will be a one-time “shortfall assessment” in the first quarter of 2019 to bring the fund to 1.35%.

View the final rule.
Read ABA’s summary of the rule.


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Michelle Johnson said...

the FDIC issued a final rule on recapitalization of its insurance fund according to the Dodd-Frank Act and the FDIC's authority under section 7 of the Federal Deposit Insurance (FDI) Act. Under the final rule, the FDIC imposed a surcharge on the quarterly assessments of insured depository institutions with total consolidated assets of $10 billion or more. The surcharge will equal an annual rate of 4.5 basis points applied to the institution's assessment base (with certain adjustments). If the Deposit Insurance Fund (DIF) reserve ratio reaches 1.15 percent before July 1, 2016, surcharges will begin July 1, 2016. If the reserve ratio has not reached 1.15 percent by that date, surcharges will begin the first day of the calendar quarter after the reserve ratio reaches 1.15 percent. Surcharges will continue through the quarter that the reserve ratio first reaches or exceeds 1.35 percent, but not later than December 31, 2018. If you need assistance in Insurance, plesae contact us!

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