WASHINGTON — The Federal Deposit Insurance Corp. is set to vote Thursday morning on a proposal that would force big banks to bear the assessment burden of growing the agency's federal reserves to a new minimum.
The agency projects that the Deposit Insurance Fund will reach a 1.15% ratio of reserves to insured deposits by early next year, at which point the agency will revamp what institutions pay in assessments.
Under the plan, banks with less than $10 billion of assets will see their premium reduced by around 30%. Banks over that asset threshold will see their base assessment rate similarly decline, but must pay a 4.5 basis point surcharge over the following two years to help grow the fund to 1.35%. As a result, roughly two-thirds of large banks will pay more in assessments, the FDIC said.
The agency's board is scheduled to vote on the plan this morning, when it is likely to be approved.
"This proposal takes a balanced approach," FDIC Chairman Martin Gruenberg said in remarks prepared for delivery. "The assessment surcharges on large institutions would be spread out over time and should be fully manageable for the institutions."
The FDIC said it expects the surcharge to be in effect for eight quarters, at which point the fund is projected to reach its statutory minimum of 1.35%. If the fund has not reached that point by the end of March 2019, then an additional shortfall assessment would be levied on banks with more than $10 billion of assets.
The FDIC estimates that large banks will end up paying about $7 billion this year under the current assessment schedule. After the surcharge is implemented, they will be paying nearly $10 billion per year for the two years the surcharge is in effect.
Under the Dodd-Frank Act, the DIF is required to reach a 1.35% reserve ratio by 2020. But the law specifically said the burden of reaching that target must fall on larger institutions once the ratio reaches 1.15%. Under the agency's plan, the reserve ratio is projected to reach 1.35% before the end of 2018.
"By aiming to reach the minimum reserve ratio ahead of the statutory deadline, this approach reduces risk that the FDIC would have to raise rates unexpectedly in the event of a future period of stress and should allow the FDIC to maintain stable and predictable assessments," Gruenberg said.