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4000 - Advisory Opinions

Federal Deposit Insurance Act Does Not Distinguish Between Secured and Unsecured Deposits for Assessment Purposes

FDIC-91-77 September 3, 1991 Jules Bernard, Counsel

In your letter of July 29, 1991, you ask Chairman Seidman to review the assessment imposed on a tax-and-loan-account deposit in your bank. Chairman Seidman has referred your letter to the Legal Division for review and response.

You mention an earlier letter, addressed to Bill Farrell of our Division of Accounting and Corporate Services, in which you described the basis for your objection to the assessment:

It is our view, as this deposit was fully secured as required by law, it is not subject to FDIC insurance and should be excluded from the assessment base.

The Federal Deposit Insurance Act does not distinguish between secured and unsecured deposits for the purpose of computing the assessment base of an insured institution. Nor does the Act correlate an institution's assessment base with the institution's "insured deposits." Rather, the Act specifies that the institution's assessment base for any date:

. . . shall be equal to the depository institution's liability for deposits (including the deposits of any other depository institution for which it has assumed liability) as reported in its report of condition for such date, plus the assessment base additions set forth in paragraph (5), and less the assessment base deductions set forth in paragraph (6).

12 U.S.C. 1817(b)(4)(A).

Paragraph (6) sets forth certain adjustments to the assessment base. None of these adjustments refer to secured (as opposed to unsecured) deposits. See id. 1817(b)(6).

Your larger point, however, seems to be that there appears to be some disparity between the FDIC's exposure to loss on one hand, and the statutory method for computing assessments on the other. Congress may take the opportunity presented by the current round of banking legislation to remove any such disparity, perhaps by creating a risk-based assessment program.

Thank you for your inquiry, and for your insights into this issue. If you would like to discuss it further, or if I can help you in any other way, please call me at (202) 898-3731.

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