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After the FDIC said the Deposit Insurance Fund reserve ratio is on track to reach the statutory minimum ahead of schedule, ICBA expressed strong support for proposals from the agency’s leaders to decrease deposit insurance assessments for community banks.
Background: In its latest semiannual update on the DIF Restoration Plan, the FDIC projected the reserve ratio will reach the statutory minimum of 1.35% by 2026, two years ahead of schedule.
Proposed Assessment Reduction: During Thursday’s FDIC board meeting, Acting Comptroller of the Currency Michael Hsu and Consumer Financial Protection Bureau Director Rohit Chopra said reducing community bank assessments due to the faster-than-expected reserve ratio increase would support a more diverse banking system and recognize that community banks pose less risk to the DIF than larger institutions.
ICBA Support: In a national news release, ICBA President and CEO Rebeca Romero Rainey encouraged the full FDIC board to support this approach and take action to ensure community banks do not bear the cost of the risk posed by too-big-to-fail institutions.
Continued Policy Distinction: “The FDIC’s special assessment exemption for the vast majority of community banks recognizes the importance of distinguishing large banks that pose systemic risk to the financial system from the thousands of community banks dedicated to serving local communities,” Romero Rainey said. “Continuing to recognize these important differences via deposit insurance policy will help support our nation’s consumers, small businesses, and local economies.”