WASHINGTON–The FDIC’s board has voted to adopt a proposal to increase the Deposit Insurance Fund (DIF) to the statutorily required minimum level of 1.35%.
Congress in the Dodd-Frank Wall Street Reform and Consumer Protection Act increased the minimum for the DIF reserve ratio, the ratio of the amount in the fund to insured deposits, from 1.15% to 1.35%, and required that the ratio reach 1.35% by Sept. 30, 2020. Dodd-Frank also made banks with $10 billion or more in total assets responsible for the increase from 1.15% to 1.35%.
Under a rule adopted by the FDIC in 2011, regular assessment rates for all banks will decline when the reserve ratio reaches 1.15%, which the FDIC expects will occur in early 2016. Banks with total assets of less than $10 billion will have substantially lower assessment rates under the 2011 rule.
The proposed rule approved would impose on banks with at least $10 billion in assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The FDIC expects the reserve ratio would likely reach 1.35% after approximately two years of payments of the proposed surcharges.
"The FDIC is proposing to implement the requirement to increase the Deposit Insurance Fund to the statutory minimum through a balanced and deliberate approach," FDIC Chairman Martin J. Gruenberg said in a statement. "This approach would ensure that the DIF reaches the minimum reserve ratio while maintaining relatively stable and predictable assessments. A large majority of banks will have substantially reduced assessments as the DIF reaches 1.15%."
The primary purposes of the Deposit Insurance Fund are to protect the depositors of insured banks and to resolve failed banks. The DIF is funded mainly through quarterly assessments on insured banks.
After being depleted during the recent financial crisis, the FDIC reported the DIF has risen for the past 5-1/2 years to $67.6 billion as of June 30. The reserve ratio at the end of June was 1.06%.