The FDIC approved Friday a rule that obligates U.S. banks to pay a one-time industry fee to replenish the fund used to resolve bank failures. The introduction of the new fee is estimated to bring in $5.6 billion in new funds.
The FDIC said it will impose on U.S. insured depository banks a 5 basis point special assessment charge based on each institution’s assets, minus its Tier 1 capital. That translates in banks paying 5 cents into the fund for each $100 of assets they have minus their Tier 1 capital. This should result, according to the key regulator, in maintaining a year-end fund balance and reserve ratio that are positive, albeit close to zero. The agency however noted the importance of recognizing the inherent uncertainty in these projections. Given the importance of maintaining a positive fund balance and reserve ratio, in FDIC’s view, it is probable that an additional special assessment will be necessary.
From FDIC: [If], after June 30, 2009, the reserve ratio of the DIF [Depositors Insurance Fund] is estimated to fall to a level that the Board believes would adversely affect public confidence or to a level which shall be close to or below zero at the end of any calendar quarter, the Board, by vote, may impose an additional special assessment of up to 5 basis points… Any single additional special assessment will not exceed 10 basis points times the institution’s assessment base for the corresponding quarter’s risk-based assessment…
The FDIC also revised the expected loss for the DIF to $70 billion over the next five years. The prior estimate was $65 billion. The reserve ratio of the DIF declined from 1.22% as of Dec. 31, 2007, to 0.40% (preliminary) as of Dec. 31, 2008, and is expected to decline further by March 31, 2009.