Staff of the FDIC
recommended revising the proposed rules on calculation of deposit insurance assessments
for small insured depository institutions, which were initially proposed
in June 2015. The staff highlighted three important changes in
the revised NPR, such as the: 1) Introduction of three new measures (the one
year asset growth measure, a core deposit ratio, and a loan mix index); 2)
Launch of a new broker deposit ratio that would increase assessment rates for
banks holding over 10 percent of assets in broker deposits; and 3) Exclusion of
reciprocal deposits for well-capitalized small banks that have a CAMEL
composite rating of 1 or 2. With these changes, the FDIC staff assured
the Board that the revised NPR would be revenue neutral, and that 80 percent of
small banks would have either the same or lower deposit insurance assessment
rates. Further, the staff indicated that a “compelling benefit of the
proposal” is that the revised NPR would better predict bank failure in crisis
scenarios than the earlier proposal put forth in June 2015.
Martin Gruenberg, Chair of the FDIC
Gruenberg explained that the revised NPR would increase assessment rates only
when asset growth exceeds 10 percent in one year. In addition, he claimed
that the revised broker deposit ratio that will be used to calculate a bank’s
assessment rate is consistent with comments received on the June 2015
Gruenberg asserted that the revised proposal would not change the aggregate
amount that the FDIC expects them to collect for small banks, while more than
93% of small banks would experience rate decreases. Gruenberg also explained
that the FDIC will publish an online assessment calculator to help banks
estimate their assessment rates under the revised proposal. Gruenberg indicated
his support for publication of the revised NPR.
Thomas Curry, Comptroller of the
expressed his support for issuing the NPR with a 30-day comment period.
Richard Cordray, Director, Consumer Financial
asked about the implementation timeline by clarifying that the proposed rule
would take effect the quarter after the deposit insurance fund (DIF) reserve
ratio reaches 1.15% or as soon as possible. The staff explained that the
proposal would likely take effect in the fourth quarter of 2016, or possibly
the third quarter. Cordray indicated that he had “no concerns” with the
Thomas Hoenig, Vice Chairman, FDIC
indicated that he is “fine” with the proposal, but asked staff to clarify why
they selected the 10 percent value for the asset growth indicator. Staff
explained that they wanted to exclude “normal growth” in assets over a one-year
period and that they believed that threshold was a “reasonable accommodation”
to that end.
FDIC Board unanimously approved the NPR.
information about this event can be accessed here.