FDIC finalizes rule to increase deposit insurance rates

The FDIC on Oct. 18 adopted a final rule to increase initial base deposit insurance assessment rate schedules by 2 basis points starting early next year. 

The agency says the increase is necessary to ensure the Deposit Insurance Fund reserve ratio reaches its statutory minimum of 1.35 percent by September 2028. 

Though the rate increase will cause banks to pay more for deposits, the FDIC states that it will “have an insignificant effect on institutions’ capital levels, is estimated to reduce income slightly by annual average of 1.2 percent, and should not impact lending or credit availability in any meaningful way.”

“The increased assessment revenue will strengthen the DIF at a time of significant downside risk to the economy and financial system, increasing the likelihood that the reserve ratio will reach the statutory minimum of 1.35 percent while reducing the likelihood of a pro-cyclical increase in the future, and promoting public confidence in federal deposit insurance,” said Acting Chair Martin Gruenberg.  

The FDIC announced the plan earlier this year. Gruenberg said the assessments would vary based on a bank’s condition, size and other factors. 

Several trade industry trade groups criticized the plan. Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, said the vote “penalizes community banks and wrongly shifts the burden to community banks to subsidize the systemic risk posed by the nation’s largest banks.”  

“This significant rate hike not only disproportionately affects community banks, but it also unnecessarily restricts community bank lending in local communities at a time of economic uncertainty and fails to sufficiently collect enough assessments from the large and complex institutions that pose the greatest risk to the Deposit Insurance Fund,” said Romero Rainey. “ICBA is profoundly disappointed that the FDIC didn’t consider a lower rate hike, the impact on community banks and local communities, or the more than 150 community banker comments submitted opposing the assessment increase.”