The FDIC has approved two proposed rules that would amend its deposit insurance assessment regulations. The first proposal issued on November 9 would change the assessment base from one based on domestic deposits to one based on total liabilities, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). Under the proposed rule, the assessment base would be defined as “average consolidated total assets minus average tangible equity.” The proposed rule would also permit certain reductions for banker’s banks and custodial banks, revise existing adjustments to assessment rates, and revise deposit insurance assessment rate schedules in light of the changes to the assessment base. Comments on the proposed rule are due by January 3, 2011. The second assessment-related proposal replaces a proposed rule revising the deposit insurance assessment system for large institutions (those with at least $10 billion in assets) that was approved by the FDIC on April 13. In addition to conforming changes required by the Dodd-Frank Act, the large bank proposal would eliminate risk categories and debt ratings from the assessment calculation for large banks and would instead use scorecards that include financial measures that are predictive of long-term performance. Comments on the large bank proposal are due by January 10, 2011.
Notes: The Dodd-Frank Act requires that the FDIC amend its regulations to redefine the assessment base used for calculating deposit insurance assessments from adjusted domestic deposits to average consolidated total assets minus average tangible equity. Average tangible equity would be defined as average end-of-month Tier 1 capital for all institutions, but institutions with less than $1 billion in assets could use end-of-quarter Tier 1 capital. Since the new assessment base would be much larger than the current base, the FDIC is also proposing to lower assessment rates to avoid significantly altering the total amount of revenue collected from the industry. Changes to existing adjustments to assessment rates would include conforming changes to the unsecured debt adjustment and brokered deposit adjustment, eliminating the secured liability adjustment, and creating a new adjustment that would increase the assessment rate for an institution that holds long-term unsecured debt issued by another insured depository institution (Depository Institution Debt Adjustment). Under the proposed rule, effective April 1, 2011, the initial and total base assessment rates (in basis points) would be as follows:
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