Statement by
FDIC Chairman Martin J. Gruenberg
On the
Notice of Proposed Rulemaking
Deposit Insurance Assessments for Small Banks
FDIC Board Meeting,
Washington, DC
June 16, 2015
In 1991, Congress directed the FDIC to establish and maintain a system that bases
each institution’s deposit insurance assessment on the risk that the institution poses to
the insurance fund. The notice of proposed rulemaking before the Board today fulfills a
responsibility of the FDIC to monitor and evaluate how well the assessments charged
by the FDIC reflect risks to the insurance fund, and to consider improvements to the
assessment system when appropriate.
The last major update to risk-based assessments for small banks -- that is, banks with
less than 10 billion dollars in assets -- became effective in 2007. This proposal updates
the data and methods that we use to determine risk-based assessments for small banks
to reflect the experience during the recent financial crisis and make assessment rates
more forward looking in how they capture risk. In particular, the proposal would base
assessments on a model estimating the probability of failure using data from the
financial crisis and prior years. These contemplated improvements would allow
assessments to better differentiate riskier banks from safer banks, and allocate the
costs of maintaining a strong Deposit Insurance Fund accordingly.
I would also note that the proposal is revenue neutral, so that it would not change the
aggregate amount that the FDIC expects to collect from small banks. It would only
change the allocation of premium costs based on the risk profiles of banks. To help
banks understand the potential effect of the proposed rule, the FDIC is publishing an
online assessment calculator that will allow institutions to estimate their assessment
rates under the proposal.
I support publication of this NPR with a 60-day comment period and would like to thank
staff for bringing forward this carefully developed proposal. We welcome public
comment on the proposal.
Last Updated 6/16/2015
FDIC Chairman Martin J. Gruenberg
On the
Notice of Proposed Rulemaking
Deposit Insurance Assessments for Small Banks
FDIC Board Meeting,
Washington, DC
June 16, 2015
In 1991, Congress directed the FDIC to establish and maintain a system that bases
each institution’s deposit insurance assessment on the risk that the institution poses to
the insurance fund. The notice of proposed rulemaking before the Board today fulfills a
responsibility of the FDIC to monitor and evaluate how well the assessments charged
by the FDIC reflect risks to the insurance fund, and to consider improvements to the
assessment system when appropriate.
The last major update to risk-based assessments for small banks -- that is, banks with
less than 10 billion dollars in assets -- became effective in 2007. This proposal updates
the data and methods that we use to determine risk-based assessments for small banks
to reflect the experience during the recent financial crisis and make assessment rates
more forward looking in how they capture risk. In particular, the proposal would base
assessments on a model estimating the probability of failure using data from the
financial crisis and prior years. These contemplated improvements would allow
assessments to better differentiate riskier banks from safer banks, and allocate the
costs of maintaining a strong Deposit Insurance Fund accordingly.
I would also note that the proposal is revenue neutral, so that it would not change the
aggregate amount that the FDIC expects to collect from small banks. It would only
change the allocation of premium costs based on the risk profiles of banks. To help
banks understand the potential effect of the proposed rule, the FDIC is publishing an
online assessment calculator that will allow institutions to estimate their assessment
rates under the proposal.
I support publication of this NPR with a 60-day comment period and would like to thank
staff for bringing forward this carefully developed proposal. We welcome public
comment on the proposal.
Last Updated 6/16/2015