The FDIC's Board of Directors today approved for public comment three proposed rules governing deposit insurance assessments under the Deposit Insurance Reform Act of 2005, including one that would allocate a one-time $4.7 billion assessment credit among insured institutions.
Congress mandated this one-time assessment credit to acknowledge contributions by institutions to build up the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) in the early- to mid-1990s. The Reform Act requires the FDIC to allocate the one-time assessment credit to each "eligible insured depository institution" or its "successor" based on the assessment base of the institution as of December 31, 1996, as compared to the combined aggregate assessment base of all eligible institutions as of that date, taking into account other factors the Board may deem appropriate. The statute defines an "eligible insured depository institution" as one that was in existence on December 31, 1996, and had paid a deposit insurance assessment before then. The FDIC is charged with defining "successor" for these purposes.
The proposed rule issued today would define a "successor" as the resulting institution in a merger or consolidation involving an institution that was eligible for the one-time credit. The proposed rule also seeks comment on alternative definitions of successor, including one that would make the purchaser of deposits a "successor," even if no merger or consolidation had occurred.
The second FDIC proposal issued today would establish a two-year interim rule governing the payment of dividends from the Deposit Insurance Fund, the fund created on March 31, 2006, through the merger of the BIF and the SAIF. However, the prospect of a dividend payment while the interim rule would be in effect appears unlikely. The third proposal relates to certain operational and procedural changes to the FDIC's assessment regulations.
The Reform Act requires the FDIC to prescribe final credit, dividend and assessment regulations by November 5, 2006. Comments on all three proposed rules are due within 60 days of publication in the Federal Register, which is expected to occur within a week.
The FDIC's Board of Directors has previously adopted an interim final rule on deposit insurance coverage that was published on March 23, 2006. The FDIC expects to consider additional proposed rulemakings later this year, including those regarding the designated reserve ratio for the Deposit Insurance Fund, risk-based assessments and the new insurance logo.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,833 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
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