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FDIC Approves Final Rules Regarding Large Bank Stress Tests and Large Bank Assessment Pricing and Releases An Update on the DIF Projections
The Federal Deposit Insurance Corporation (FDIC) today announced publication of its final rule regarding company-run stress testing required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rule applies to covered institutions with total consolidated assets greater than $10 billion.
The final rule implements section 165(i)(2)(A) of the Dodd-Frank Act, which requires all financial companies with total consolidated assets of more than $10 billion that are regulated by a primary federal financial regulatory agency to conduct an annual company-run stress test. The final rule requires institutions with assets greater than $50 billion to begin conducting annual stress tests this year, although the FDIC reserves the authority to allow covered institutions above $50 billion to delay implementation on a case-by-case basis where warranted. The rule delays implementation for covered institutions with total consolidated assets between $10 billion and $50 billion until October 2013.
For institutions with assets greater than $50 billion that are required to begin stress testing this year, the FDIC anticipates releasing stress-testing scenarios in November. Institutions will use their data as of September 30, 2012, to conduct the stress test. Results are due in January 2013.
Today's final rule revises the notice of proposed rulemaking published in the Federal Register on January 23, 2012. The FDIC reviewed a wide range of public comments, and coordinated closely with the Federal Reserve Board (Board) and the Office of the Comptroller of the Currency (OCC) to ensure that rules issued by the FDIC, the Board, and the OCC are consistent and comparable. The FDIC also coordinated with the Federal Insurance Office as required by the Dodd-Frank Act.
The FDIC Board today also approved a final rule that refines the deposit insurance assessment system for insured depository institutions with more than $10 billion in assets. The final rule amends the definitions used to identify concentrations in higher-risk assets to better reflect the risk posed to institutions and the FDIC. As of June 30, 2012, there were 108 institutions with more than $10 billion in assets.
Finally, the FDIC also updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) over the next several years and concluded that the DIF reserve ratio is on track to reach the statutory minimum target of 1.35 percent by the September 30, 2020, deadline. Commenting on the projections, Acting Chairman Martin J. Gruenberg noted, "We are continuing on a path to gradually rebuild the fund in a manner that should not unduly burden banks while the economy continues to recover."
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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 7,246 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.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-116-2012
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