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FDIC Board Approves Plans to Restore DIF Reserve Ratio, Pay Assessment Credits

FDIC Board Approves Plans to Restore DIF Reserve Ratio, Pay Assessment Credits

Posted: Sep 24 2020
The FDIC Board of Directors has approved a plan to restore the Deposit Insurance Fund (DIF) reserve ratio to the statutorily required 1.35 percent within eight years.  The ratio, which stood at 1.41 percent in December 2019, dropped to 1.3 percent in June, primarily due to the significant growth in deposits during the pandemic. 

Under the approved plan, the agency will maintain the current deposit insurance assessment rate schedule for banks of all sizes and that an increase is not likely to be needed.  The agency will also monitor deposit balance trends, potential losses and other factors that affect the reserve ratio; and provide updates to its loss and income projections at least twice a year.

In related news, the Board also approved a plan to pay the assessment credits that banks with less than $10 billion in assets.  The credits were accrued to partially offset these institutions’ payments to recapitalize the DIF from 2016-2018; however, the FDIC has the authority to halt the payments if the reserve ratio falls below 1.35 percent.  The Board’s approval means that approximately $5.8 million to 190 institutions.

To read more, visit: https://www.fdic.gov/news/board/2020/2020-09-15-notice.html

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