Statement of
Martin J. Gruenberg Chairman,
Federal Deposit Insurance Corporation Update
Of
Projected Deposit Insurance Fund Losses, Income,
And
Reserve Ratios
for the
Restoration Plan
September 20, 2016
The Deposit Insurance Fund balance stood at almost $78 billion at the end of June,
resulting in a reserve ratio of 1.17 percent. This is the highest reserve ratio in more than
eight years. Crossing the 1.15 percent threshold represents a significant milestone for
the fund, which has had a strong recovery from its negative $21 billion low-point at the
end of 2009.
The improvement in the Deposit Insurance Fund since the financial crisis reflects
progress in implementing the long-term fund management plan put into place by the
FDIC in the post-crisis period, as well as improving conditions in the banking industry.
In early 2011, as part of that plan, the FDIC Board decided to reduce overall
assessment rates when the reserve ratio reached 1.15 percent, and the Board
reaffirmed that decision in a rule we adopted in April of this year. Starting this quarter, a
large majority of banks will pay lower deposit insurance assessments. Assessment
rates for 93 percent of banks with less than $10 billion in assets are expected to decline.
On average, regular quarterly assessments are expected to decline by about one-third
for these smaller institutions.
The long-term plan also envisioned that the FDIC Board would adopt measures to
ensure that the reserve ratio reaches the statutory minimum set by the Dodd-Frank Act
– 1.35 percent – by the statutory deadline of September 30, 2020. In March of this year,
the Board adopted a rule designed to achieve that goal. Under that rule, now that the
reserve ratio has reached 1.15 percent, banks with $10 billion or more in assets will pay
temporary surcharges to bring the reserve ratio to the statutory minimum. The FDIC
projects that the surcharges will extend over eight quarters.
Although large banks will pay surcharges in addition to their regular quarterly
assessments, approximately one-third of large banks are still expected to pay lower
total assessments because of the reduction in regular assessment rates.
Small banks will receive credits for the portion of their assessments that contribute to
the increase in the reserve ratio from 1.15 percent to 1.35 percent.
Martin J. Gruenberg Chairman,
Federal Deposit Insurance Corporation Update
Of
Projected Deposit Insurance Fund Losses, Income,
And
Reserve Ratios
for the
Restoration Plan
September 20, 2016
The Deposit Insurance Fund balance stood at almost $78 billion at the end of June,
resulting in a reserve ratio of 1.17 percent. This is the highest reserve ratio in more than
eight years. Crossing the 1.15 percent threshold represents a significant milestone for
the fund, which has had a strong recovery from its negative $21 billion low-point at the
end of 2009.
The improvement in the Deposit Insurance Fund since the financial crisis reflects
progress in implementing the long-term fund management plan put into place by the
FDIC in the post-crisis period, as well as improving conditions in the banking industry.
In early 2011, as part of that plan, the FDIC Board decided to reduce overall
assessment rates when the reserve ratio reached 1.15 percent, and the Board
reaffirmed that decision in a rule we adopted in April of this year. Starting this quarter, a
large majority of banks will pay lower deposit insurance assessments. Assessment
rates for 93 percent of banks with less than $10 billion in assets are expected to decline.
On average, regular quarterly assessments are expected to decline by about one-third
for these smaller institutions.
The long-term plan also envisioned that the FDIC Board would adopt measures to
ensure that the reserve ratio reaches the statutory minimum set by the Dodd-Frank Act
– 1.35 percent – by the statutory deadline of September 30, 2020. In March of this year,
the Board adopted a rule designed to achieve that goal. Under that rule, now that the
reserve ratio has reached 1.15 percent, banks with $10 billion or more in assets will pay
temporary surcharges to bring the reserve ratio to the statutory minimum. The FDIC
projects that the surcharges will extend over eight quarters.
Although large banks will pay surcharges in addition to their regular quarterly
assessments, approximately one-third of large banks are still expected to pay lower
total assessments because of the reduction in regular assessment rates.
Small banks will receive credits for the portion of their assessments that contribute to
the increase in the reserve ratio from 1.15 percent to 1.35 percent.
As I stated when the Board adopted the assessment rules earlier this year, the FDIC is
taking a balanced approach in raising the reserve ratio to 1.35 percent.
The staff currently projects that the reserve ratio should reach 1.35 percent in 2018,
about two years ahead of the statutory deadline. By meeting this target earlier than the
mandate, we reduce the risk that the FDIC will have to raise rates unexpectedly in the
event of a future period of stress and help ensure stable and predictable assessments.
We have made substantial progress in restoring the health of the Deposit Insurance
Fund, an achievement from which I think both the FDIC and the banking industry should
take satisfaction.
Last Updated 9/20/2016
taking a balanced approach in raising the reserve ratio to 1.35 percent.
The staff currently projects that the reserve ratio should reach 1.35 percent in 2018,
about two years ahead of the statutory deadline. By meeting this target earlier than the
mandate, we reduce the risk that the FDIC will have to raise rates unexpectedly in the
event of a future period of stress and help ensure stable and predictable assessments.
We have made substantial progress in restoring the health of the Deposit Insurance
Fund, an achievement from which I think both the FDIC and the banking industry should
take satisfaction.
Last Updated 9/20/2016