FDIC Board Proposes Implementation of Dodd-Frank Assessment Changes and a Revised Assessment System for Large Institutions

by Mercator Advisory Group 0

The FDIC Board of Directors today approved 2 proposed rules to revamp the way the asses fees for deposit insurance and are calling for comments before the rules go into effect.

The first would implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that changes the assessment base from one based on domestic deposits (as it has been since 1935) to one based on assets. The second proposal would re-propose changes for the deposit insurance assessment system for large institutions given Dodd-Frank’s changes to the assessment.

The objective of the changes would be to make sure larger institutions would incur larger assessments before they started to go bad and thereby better protect the FDIC insurance fund from institutions that expand rapidly by taking more risk that might take a number of months to “season” before the underlying risks are accounted for using the old methodology. Overall the changes should be more or less neutral now but would be more predictive of increased risk in the future.

Read full article:

http://www.fdic.gov/news/news/press/2010/pr10248.html