Deposit insurance assessment rates paid by banks would be increased by 2 basis points under a proposal issued Tuesday by the federal bank deposit insurance agency.
The proposed assessment rate schedules would begin with the first assessment period of 2023 and remain in effect unless and until the reserve ratio meets or exceeds 2%, the Federal Deposit Insurance Corp. (FDIC) in a press release.
Comments on the proposal, which was issued by the FDIC Board at its Tuesday meeting, are due by Aug. 20.
The increase in the assessment rates, the agency said, are necessary to “increase the likelihood that the reserve ratio of the Deposit Insurance Fund (DIF) reaches the statutory minimum of 1.35% by the statutory deadline of September 2028.”
The agency said “extraordinary growth” in insured deposits in the first and second quarters of 2020 caused the DIF reserve ratio (the ratio of the DIF to all insured deposits in the United States )to decline below the statutory minimum of 1.35%. As of June 30, 2020, FDIC said, the reserve ratio stood at 1.30%.
“As required by the Federal Deposit Insurance Act, the Board adopted a Restoration Plan on Sept. 15, 2020, to restore the DIF reserve ratio to at least 1.35% by Sept. 30, 2028,” the agency said. “The Plan also requires the FDIC to update its analysis and projections for the fund balance and reserve ratio at least semiannually, which enables the FDIC to evaluate whether the reserve ratio is likely to reach 1.35% within the 8-year period.”
FDIC said insured deposits continued to grow. As of March 31, 2022, the agency said, the reserve ratio declined by 4 basis points to 1.23%.
“The Amended Restoration Plan and proposed increase in assessment rates intend to increase the likelihood that the reserve ratio will reach the statutory minimum of 1.35% by Sept. 30, 2028, as required by statute,” FDIC added. “The proposal would also support growth in the DIF in progressing toward the FDIC’s long-term goal of a 2% Designated Reserve Ratio (DRR).”