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 the public’s confidence the FDIC has adequate resources to protect the nation’s depositors.
  • ICBA supports a deposit insurance assessment framework that is appropriately tiered and risk weighted.
  • ICBA opposes sharp, procyclical increases to deposit insurance assessments.
  • ICBA encourages the FDIC to create a systemic risk premium, which would require the nation’s largest TBTF institutions to pay a premium on their deposit insurance assessments based on the unique risk they pose to the DIF in the event one of these institutions required resolution.
  • ICBA opposes increases to deposit insurance assessments that are based on the DIF achieving a 2% designated reserve ratio rather than the statutory minimum of 1.35%.

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.

In September 2020, the FDIC adopted a plan to restore the DIF by September 2028 and found no increases to deposit insurance assessments were necessary to do so. Nonetheless, the FDIC published a final rule in 2022 which uniformly increased the base deposit insurance assessment rate for all banks by 2 basis points until the DIF reaches a “designated reserve ratio” of 2 percent. The 2 percent goal is the FDIC’s long-term goal for the DIF reserve ratio – it is not a ratio the FDIC is required, under any law, to maintain.

Staff Contact

Christopher Cole

EVP, Senior Regulatory Counsel

ICBA

[email protected]

Jenna Burke

EVP, General Counsel, Government Relations & Public Policy

ICBA

[email protected]

ICBA: Silicon Valley Bank and the Nation’s Largest Banks Are Not Community Banks

March 13, 2023

ICBA Press Release Banner 2020

ICBA will oppose community banks bearing any financial responsibility for potential losses to the DIF

Washington, D.C. (March 13, 2023)
—Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued this response following a joint statement released from the Treasury Department, FDIC, and Federal Reserve following Friday’s closure of Silicon Valley Bank.

“It’s sad to see any bank fail and for depositors to suffer any uncertainty about the safety of their deposits. This is why it’s important to take stock of lessons learned from the Silicon Valley Bank closure.

“As of Dec. 31, 2022, Silicon Valley Bank had $213 billion in assets and was, at the time of its closure, the 16th largest bank in the country. Silicon Valley Bank experienced rapid asset growth of 215% between year-end 2019 and 2022.

“ICBA encourages consumers and small businesses to better understand that not all banks are created equal. In stark contrast to the nation’s largest banks, community banks operate under an entirely different business model—one that’s based locally and is relationship focused. As small businesses themselves, local community banks take pride in serving the unique needs of their customers and communities. In short, they are in it for the long haul to serve the needs of those who count on them for financial stability and prosperity.  

“ICBA will continue educating the public about the stability of the community banking industry and its time-tested business model. ICBA will also vehemently oppose community banks bearing any financial responsibility for potential losses to the deposit insurance fund.”

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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