FDIC seeks comments on deposit-insurance system

THE FEDERAL DEPOSIT INSURANCE CORP. is accepting comments on its proposal to change its deposit insurance assessment system among FDIC-insured banks with less than $10 billion in total assets.
THE FEDERAL DEPOSIT INSURANCE CORP. is accepting comments on its proposal to change its deposit insurance assessment system among FDIC-insured banks with less than $10 billion in total assets.

WASHINGTON – The Federal Deposit Insurance Corp. is accepting comments on its proposal to change its deposit insurance assessment system among FDIC-insured banks with less than $10 billion in total assets.
The proposed changes, applicable only to banks that have been FDIC insured for at least five years, would include revising the financial ratios method used by banks, shifting it to a statistical model that estimates the probability of failure over three years, according to the FDIC.
The changes would also update the way the financial ratios method would be measured, eliminate risk categories and use the statistical model to determine assessment rates.
The FDIC says the changes would update the data and methods that it uses to determine risk-based assessments, which reflects the corporation’s experience during the financial crisis of 2008 and earlier years.
“The proposed pricing method for small banks would do a better job of recognizing risks before they become losses and would help ensure that banks that take on greater risks pay more for deposit insurance than their less risky counterparts,” said Martin J. Gruenberg, FDIC chairman, in a statement.
But the FDIC does not propose to change the assessment rates that would apply once the Deposit Insurance Fund (DIF) reserve ratio reaches 1.15 percent, meaning the range of initial deposit insurance assessment rates would fall once the reserve ratio hits that mark.
“To help banks understand the potential effect of the proposed rule, the FDIC has published an online assessment calculator that will allow institution to estimate their assement rates under the proposal,” the FDIC said in a press release, adding that the proposal would be revenue neutral, so “aggregate assessment revenue collected from established small banks under the proposal is expected to be approximately the same as it would have been otherwise.”
The comment period is 60 days retroactive to June 16 and submission rules can be found on the FDIC website: www.fdic.gov.

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