Our Position

Deposit Insurance

Position

  • Our nation’s federal deposit insurance system is critical to depositor confidence in the banking system, to the protection of small depositors, and to the funding base of community banks. A strong Deposit Insurance Fund (DIF) is important to maintaining public confidence that the FDIC has adequate resources to protect the nation’s depositors.

  • ICBA commends the FDIC for remaining flexible during the pandemic and establishing a Deposit Insurance Fund Restoration Plan that provides until September 30, 2028 to restore the DIF reserve ratio to 1.35percent. This will allow deposits to return to pre-pandemic levels without increasing insurance assessments.

  • ICBA supported S. 2155 which ensures that reciprocal deposits are not considered brokered deposits under the Federal Deposit Insurance Act.

  • ICBA commends the FDIC for substantially mitigating the impact of SBA PPP lending on FDIC insurance assessments.

Background

Deposit insurance has been the stabilizing force of our nation’s banking system for more than 85 years. It promotes public confidence by providing safe and secure depositories for small businesses and individuals alike.

Deposit Insurance Fund Restoration Plan. The Federal Deposit Insurance Act requires the FDIC to maintain a minimum reserve ratio for the DIF of 1.35 percent and to establish a Deposit Insurance Fund Restoration Plan if the reserve ratio falls below the statutory minimum.

Due to economic stimulus measures enacted in response to the pandemic, and elevated savings rates during this time, quarterly deposit growth rates outpaced deposit growth in the DIF causing the reserve ratio to decline below the required 1.35 percent minimum. ICBA commends the FDIC for establishing a Deposit Insurance Fund Restoration Plan that provides sufficient time and flexibility for the surge of insured deposits to recede and normalize without increasing community bank insurance assessments.

SBA Lending. ICBA commends the FDIC for substantially mitigating the impact of SBA PPP lending on FDIC insurance assessments. For instance, nearly every ratio that determines a small bank’s assessment rate excludes PPP loans because of the FDIC’s recent rule changes.

These ratios include: the net income before taxes to total assets ratio, the nonperforming loans and leases to gross assets ratio, the other real estate owned to gross assets ratio, the brokered deposit ratio, the one-year asset growth measure, and the loan mix index (LMI). Furthermore, the assessment base used to determine assessments excludes PPP loans.

Staff Contact

Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC

Email

Jenna Burke

Senior Vice President and Senior Regulatory Counsel

Washington, DC

Email

Letters to Regulators and Congress

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