Amended Restoration Plan and Notice of Proposed Rulemaking on Assessments, Revised Deposit Insurance Assessment Rates

Laws and Regulations

June 21, 2022

Summary:

The Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023. The FDIC concurrently adopted an Amended Restoration Plan, which incorporates the increase in initial base assessment rates in order to raise the reserve ratio to the minimum threshold of 1.35 percent by the statutory deadline of September 30, 2028. The proposed assessment rate schedules would remain in effect unless and until the reserve ratio meets or exceeds 2 percent in order to support growth in the Deposit Insurance Fund (DIF) in progressing toward the FDIC's long-term goal of a 2 percent Designated Reserve Ratio (DRR).

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-insured financial institutions.

Highlights:

Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio, calculated by dividing the DIF balance by the dollar amount of insured deposits in the banking system, to decline below the statutory minimum of 1.35 percent.
On September 15, 2020, the FDIC Board of Directors (Board) adopted a Restoration Plan to restore the DIF to at least 1.35 percent by September 30, 2028, maintaining the assessment rate schedule in place at the time.
Under the Restoration Plan, the FDIC is monitoring deposit balance trends, potential losses, and other factors that affect the reserve ratio.
- Based on current projections, the reserve ratio is at risk of not reaching the statutory minimum of 1.35 percent by the statutory deadline of September 30, 2028, absent an increase in assessment rates.
To increase the likelihood that the reserve ratio will meet the statutory minimum by the required deadline, the FDIC is seeking comment on a proposed rule that would increase initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023.
The proposed assessment rate schedules would remain in effect unless and until the reserve ratio meets or exceeds 2 percent, absent further Board action, in order to support growth in the DIF in progressing toward the FDIC's long-term goal of a 2 percent DRR.
Comments on the proposed rule will be accepted through August 20, 2022.