FDIC Adopts Proposed Rule to Increase DIF to Statutorily Required Level

FDIC Dodd-Frank

On October 22, the FDIC Board of Directors adopted a proposed rule to increase the Deposit Insurance Fund (DIF) reserve ratio from 1.15 percent to the statutorily required minimum of 1.35 percent. The proposed rule would impose on banks with at least $10 billion in assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The surcharge would begin the quarter after the DIF reserve ratio first reaches or exceeds 1.15 percent and would continue until the reserve ratio first reaches or exceeds 1.35 percent. The proposed rule would implement provisions of the Dodd-Frank Act requiring the DIF reserve ratio to reach 1.35 percent by September 30, 2020 and requiring that the FDIC offset the cost of raising the reserve ratio on banks with assets of less than $10 billion. The FDIC expects that the proposed surcharges combined with its regular assessments would raise the reserve ratio to 1.35 percent before December 31, 2018. The proposed rule also provides for assessment credits for banks with assets of less than $10 billion for the portion of their regular assessments that contributes to the growth in the reserve ratio between 1.15 percent and 1.35 percent.