The Dodd-Frank Wall Street Reform and Consumer Protection Act increased the minimum reserve ratio for the Deposit Insurance Fund (DIF) from 1.15 percent to 1.35 percent.
Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent. As of June 30, 2020, the reserve ratio had fallen below the statutory minimum and stood at 1.30 percent. The Federal Deposit Insurance Act (FDI Act) requires that the FDIC's Board of Directors (Board) adopt a restoration plan when the DIF reserve ratio falls below 1.35 or is expected to within 6 months. Under the FDI Act, the restoration plan must restore the reserve ratio to at least 1.35 percent within 8 years of establishing the Plan, absent extraordinary circumstances.
In September 2020, the FDIC Board of Directors adopted a Restoration Plan to restore the reserve ratio to at least 1.35 percent within eight years, absent extraordinary circumstances, as required by the FDI Act. The Restoration Plan maintained the assessment rate schedules in place at the time and required the FDIC to update its analysis and projections for the DIF balance and reserve ratio at least semiannually.
In June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35 percent by September 30, 2028, the statutory deadline to restore the reserve ratio. Based on this update, the FDIC Board approved an Amended Restoration Plan.
Under the Amended Restoration Plan:
- The FDIC will increase initial base deposit insurance assessment rates uniformly by 2 basis points for all insured depository institutions (IDIs).
- The FDIC will propose to increase initial base deposit insurance assessment rates uniformly by 2 basis points, effective the first quarterly assessment period of 2023, published in the Federal Register as soon as possible.
- The FDIC projects that the rates proposed in the notice of proposed rulemaking would increase the likelihood that the reserve ratio would be restored to 1.35 percent by September 30, 2028.
- The FDIC will continue to monitor deposit balance trends, potential losses, and other factors that affect the reserve ratio.
- At least semiannually, the FDIC will update its analysis and projections for the fund balance and reserve ratio and, if necessary, recommend any modifications to the Amended Restoration Plan.
The Amended Restoration Plan improves the likelihood that the reserve ratio will reach the statutory minimum of 1.35 percent before the deadline of September 30, 2028.
FDIC is required by law to set deposit insurance assessments based on risk to support the Deposit Insurance Fund (DIF). A risk-based assessment system reduces the subsidy that lower-risk banks provide higher-risk banks and incentivizes banks to monitor and reduce risks that could increase potential losses to the DIF.
While the FDIC first implemented risk-based pricing in 1993 after the banking crisis of the early 1990s, Congress enacted legislation in 2006 that allowed the FDIC to charge risk-based premiums to all institutions regardless of the level of the fund. Subsequently, the FDIC refined its risk-based pricing system by establishing separate pricing methodologies for small and large banks and implemented additional adjustments based on experience resolving failed banks at the start of the 2008 financial crisis.
The FDIC also significantly revised the risk-based premium system following the crisis. First, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the FDIC amended its regulations in 2011 to redefine the assessment base by broadening it from domestic deposits to average consolidated total assets minus average tangible equity. The FDIC subsequently made revisions to its large bank pricing system in 2011 and its small bank pricing system in 2016 based on its experience resolving hundreds of failed banks over two financial crises.
Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent. In September 2020, the FDIC Board of Directors adopted a Restoration Plan to restore the reserve ratio to at least 1.35 percent within eight years, absent extraordinary circumstances, as required by the the Federal Deposit Insurance Act (FDI Act). In 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35 percent by the statutory deadline and to reduce the likelihood that the FDIC would need to consider a potentially pro-cyclical assessment rate increase when banking and economic conditions may be less favorable.
In 2023, the FDIC adopted a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The FDI Act requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.
The following rulemakings are related to assessments banks pay to support the DIF. Topics include assessment rates, large bank pricing system, small bank pricing system, special assessments, and the assessment base.
The FDIC Board has broad discretion to manage the Deposit Insurance Fund, including setting the level of the designated reserve ratio (DRR). Since 2010, the Board has consistently voted to set the DRR at 2 percent.
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2022
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2021
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2020
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2019
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2018
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2016
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The Federal Deposit Insurance Act establishes the key parameters of deposit insurance coverage, including the standard maximum deposit insurance amount, currently $250,000, and separate insurance coverage for deposits that a depositor maintains in different insurance categories. Select rulemakings related to deposits and deposit insurance are included below. For more information about deposit insurance, visit our Deposit Insurance and Deposit Insurance Basics resource pages.