This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
15459
Vol. 73, No. 57
Monday, March 24, 2008
1 The statutory factors that the Board must
consider are:
1. National and regional conditions and their
impact on insured depository institutions;
2. Potential problems affecting insured depository
institutions or a specific group or type of depository
institution;
3. The degree to which the contingent liability of
the Corporation for anticipated failures of insured
institutions adequately addresses concerns over
funding levels in the Deposit Insurance Fund; and
4. Any other factors that the Board determines are
appropriate.
12 U.S.C. 1817(e)(2)(F).
2 This provision would allow the FDIC’s Board to
suspend or limit dividends in circumstances where
the Reserve Ratio has exceeded 1.5 percent, if the
Board made a determination to continue a
suspension or limitation that it had imposed
initially when the reserve ratio was between 1.35
and 1.5 percent.
3 See section 5 of the Amendments Act. Public
Law 109–173, 119 Stat. 3601, which was signed
into law by the President on February 15, 2006.
4 This factor is limited to deposit insurance
assessments paid to the DIF (or previously to the
Bank Insurance Fund (‘‘BIF’’) or the Savings
Association Insurance Fund (‘‘SAIF’’)) and does not
include assessments paid to the Financing
Continued
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AD27
Assessment Dividends
AGENCY: Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Notice of proposed rulemaking.
SUMMARY: The FDIC is proposing
regulations to implement the assessment
dividend requirements in the Federal
Deposit Insurance Reform Act of 2005
(‘‘Reform Act’’) and the Federal Deposit
Insurance Reform Conforming
Amendments Act of 2005
(‘‘Amendments Act’’). The proposed
rule is the follow-up to the advanced
notice of proposed rulemaking on
assessment dividends the FDIC issued
in September 2007 and the temporary
final rule on assessment dividends the
FDIC issued in October 2006. The
temporary final rule sunsets on
December 31, 2008.
DATES: Comments must be received on
or before May 23, 2008.
ADDRESSES: You may submit comments
by any of the following methods:
• Agency Web Site: http://
www.fdic.gov/regulations/laws/federal.
Follow instructions for submitting
comments on the Agency Web Site.
• E-mail: Comments@FDIC.gov.
Please include ‘‘Assessment Dividends’’
in the subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
(EST).
• Federal eRulemaking Portal: http://
www.regulations.gov. Please follow the
instructions for submitting comments.
Public Inspection: All comments
received will be posted without change
to http://www.fdic.gov/regulations/laws/
federal including any personal
information provided. Comments may
be inspected and photocopied in the
FDIC Public Information Center, 3501
North Fairfax Drive, Room E–1002,
Arlington, VA 22226, between 9 a.m.
and 5 p.m. (EST) on business days.
Paper copies of public comments may
be ordered from the Public Information
Center by telephone at (877) 275–3342
or (703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
Munsell W. St. Clair, Chief, Banking and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–
8967; Missy Craig, Program Analyst,
Division of Insurance and Research,
(202) 898–8724; Donna Saulnier,
Division of Finance, Team Leader,
Assessment Management, (703) 562–
6167; or Joseph A. DiNuzzo, Counsel,
Legal Division, (202) 898–7349.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit
Insurance Act (‘‘FDI Act’’), as amended
by the Reform Act, requires the FDIC,
under most circumstances, to declare
dividends from the Deposit Insurance
Fund (‘‘DIF’’) when the DIF reserve ratio
(‘‘Reserve Ratio’’) at the end of a
calendar year equals or exceeds 1.35
percent. When the Reserve Ratio equals
or exceeds 1.35 percent, and is not
higher than 1.50 percent, the FDIC
generally must declare one-half of the
amount in the DIF in excess of the
amount required to maintain the
Reserve Ratio at 1.35 percent as
dividends to be paid to insured
depository institutions. The FDIC Board
of Directors (‘‘Board’’) may suspend or
limit dividends to be paid, however, if
it determines in writing, after taking a
number of statutory factors into account,
that: 1
1. The DIF faces a significant risk of losses
over the next year; and
2. It is likely that such losses will be
sufficiently high as to justify a finding by the
Board that the Reserve Ratio should
temporarily be allowed to grow without
requiring dividends when the Reserve Ratio
is between 1.35 and 1.50 percent or to exceed
1.50 percent.2
When the Reserve Ratio exceeds 1.50
percent at the end of a calendar quarter,
the FDI Act requires the FDIC, absent
certain limited circumstances
(discussed in footnote 2), to declare a
dividend equal to the excess of the
amount required to maintain the
Reserve Ratio at 1.50 percent as
dividends to be paid to insured
depository institutions.
If the Board decides to suspend or
limit dividends, it must submit, within
270 days of making the determination,
a report to the Committee on Banking,
Housing, and Urban Affairs of the
Senate and to the Committee on
Financial Services of the House of
Representatives. The report must
include a detailed explanation for the
determination and a discussion of the
factors required to be considered.3
The FDI Act directs the FDIC to
consider each insured depository
institution’s relative contribution to the
DIF (or any predecessor deposit
insurance fund) when calculating such
institution’s share of any dividend.
More specifically, when allocating
dividends, the Board must consider:
1. The ratio of the assessment base of
an insured depository institution
(including any predecessor) on
December 31, 1996, to the assessment
base of all eligible insured depository
institutions on that date;
2. The total amount of assessments
paid on or after January 1, 1997, by an
insured depository institution
(including any predecessor) to the DIF
(and any predecessor fund); 4
VerDate Aug<31>2005 16:41 Mar 21, 2008 Jkt 214001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\24MRP1.SGM 24MRP1
pwalker on PROD1PC71 with PROPOSALS
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
15459
Vol. 73, No. 57
Monday, March 24, 2008
1 The statutory factors that the Board must
consider are:
1. National and regional conditions and their
impact on insured depository institutions;
2. Potential problems affecting insured depository
institutions or a specific group or type of depository
institution;
3. The degree to which the contingent liability of
the Corporation for anticipated failures of insured
institutions adequately addresses concerns over
funding levels in the Deposit Insurance Fund; and
4. Any other factors that the Board determines are
appropriate.
12 U.S.C. 1817(e)(2)(F).
2 This provision would allow the FDIC’s Board to
suspend or limit dividends in circumstances where
the Reserve Ratio has exceeded 1.5 percent, if the
Board made a determination to continue a
suspension or limitation that it had imposed
initially when the reserve ratio was between 1.35
and 1.5 percent.
3 See section 5 of the Amendments Act. Public
Law 109–173, 119 Stat. 3601, which was signed
into law by the President on February 15, 2006.
4 This factor is limited to deposit insurance
assessments paid to the DIF (or previously to the
Bank Insurance Fund (‘‘BIF’’) or the Savings
Association Insurance Fund (‘‘SAIF’’)) and does not
include assessments paid to the Financing
Continued
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AD27
Assessment Dividends
AGENCY: Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Notice of proposed rulemaking.
SUMMARY: The FDIC is proposing
regulations to implement the assessment
dividend requirements in the Federal
Deposit Insurance Reform Act of 2005
(‘‘Reform Act’’) and the Federal Deposit
Insurance Reform Conforming
Amendments Act of 2005
(‘‘Amendments Act’’). The proposed
rule is the follow-up to the advanced
notice of proposed rulemaking on
assessment dividends the FDIC issued
in September 2007 and the temporary
final rule on assessment dividends the
FDIC issued in October 2006. The
temporary final rule sunsets on
December 31, 2008.
DATES: Comments must be received on
or before May 23, 2008.
ADDRESSES: You may submit comments
by any of the following methods:
• Agency Web Site: http://
www.fdic.gov/regulations/laws/federal.
Follow instructions for submitting
comments on the Agency Web Site.
• E-mail: Comments@FDIC.gov.
Please include ‘‘Assessment Dividends’’
in the subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
(EST).
• Federal eRulemaking Portal: http://
www.regulations.gov. Please follow the
instructions for submitting comments.
Public Inspection: All comments
received will be posted without change
to http://www.fdic.gov/regulations/laws/
federal including any personal
information provided. Comments may
be inspected and photocopied in the
FDIC Public Information Center, 3501
North Fairfax Drive, Room E–1002,
Arlington, VA 22226, between 9 a.m.
and 5 p.m. (EST) on business days.
Paper copies of public comments may
be ordered from the Public Information
Center by telephone at (877) 275–3342
or (703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
Munsell W. St. Clair, Chief, Banking and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–
8967; Missy Craig, Program Analyst,
Division of Insurance and Research,
(202) 898–8724; Donna Saulnier,
Division of Finance, Team Leader,
Assessment Management, (703) 562–
6167; or Joseph A. DiNuzzo, Counsel,
Legal Division, (202) 898–7349.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit
Insurance Act (‘‘FDI Act’’), as amended
by the Reform Act, requires the FDIC,
under most circumstances, to declare
dividends from the Deposit Insurance
Fund (‘‘DIF’’) when the DIF reserve ratio
(‘‘Reserve Ratio’’) at the end of a
calendar year equals or exceeds 1.35
percent. When the Reserve Ratio equals
or exceeds 1.35 percent, and is not
higher than 1.50 percent, the FDIC
generally must declare one-half of the
amount in the DIF in excess of the
amount required to maintain the
Reserve Ratio at 1.35 percent as
dividends to be paid to insured
depository institutions. The FDIC Board
of Directors (‘‘Board’’) may suspend or
limit dividends to be paid, however, if
it determines in writing, after taking a
number of statutory factors into account,
that: 1
1. The DIF faces a significant risk of losses
over the next year; and
2. It is likely that such losses will be
sufficiently high as to justify a finding by the
Board that the Reserve Ratio should
temporarily be allowed to grow without
requiring dividends when the Reserve Ratio
is between 1.35 and 1.50 percent or to exceed
1.50 percent.2
When the Reserve Ratio exceeds 1.50
percent at the end of a calendar quarter,
the FDI Act requires the FDIC, absent
certain limited circumstances
(discussed in footnote 2), to declare a
dividend equal to the excess of the
amount required to maintain the
Reserve Ratio at 1.50 percent as
dividends to be paid to insured
depository institutions.
If the Board decides to suspend or
limit dividends, it must submit, within
270 days of making the determination,
a report to the Committee on Banking,
Housing, and Urban Affairs of the
Senate and to the Committee on
Financial Services of the House of
Representatives. The report must
include a detailed explanation for the
determination and a discussion of the
factors required to be considered.3
The FDI Act directs the FDIC to
consider each insured depository
institution’s relative contribution to the
DIF (or any predecessor deposit
insurance fund) when calculating such
institution’s share of any dividend.
More specifically, when allocating
dividends, the Board must consider:
1. The ratio of the assessment base of
an insured depository institution
(including any predecessor) on
December 31, 1996, to the assessment
base of all eligible insured depository
institutions on that date;
2. The total amount of assessments
paid on or after January 1, 1997, by an
insured depository institution
(including any predecessor) to the DIF
(and any predecessor fund); 4
VerDate Aug<31>2005 16:41 Mar 21, 2008 Jkt 214001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\24MRP1.SGM 24MRP1
pwalker on PROD1PC71 with PROPOSALS
15460 Federal Register / Vol. 73, No. 57 / Monday, March 24, 2008 / Proposed Rules
Corporation (‘‘FICO’’) used to pay interest on
outstanding FICO bonds, although the FDIC collects
those assessments on behalf of FICO. Beginning in
1997, the FDIC collected separate FICO assessments
from both SAIF and BIF members.
5 Prior to issuing the temporary final rule, the
FDIC published and received comment on a
proposed temporary final rule. 71 FR 28804.
6 The sole focus of the ANPR was on the type of
assessment dividend allocation method the FDIC
should adopt. The ANPR indicated that whether
and how the FDIC should retain or revise the other
aspects of the Temporary Final Rule would be
addressed in this proposed rule.
7 However, an eligible premium would never be
negative.
3. That portion of assessments paid by
an insured depository institution
(including any predecessor) that reflects
higher levels of risk assumed by the
institution; and
4. Such other factors as the Board
deems appropriate.
The Reform Act expressly requires the
FDIC to prescribe by regulation the
method for calculating, declaring and
paying dividends. The dividend
regulation must include provisions
allowing an insured depository
institution a reasonable opportunity to
challenge administratively the amount
of dividends it is awarded. Under the
Reform Act, any review by the FDIC
pursuant to these administrative
procedures is final and not subject to
judicial review.
B. The Temporary Final Rule on
Assessment Dividends
In compliance with the Reform Act
requirement to issue regulations on
assessment dividends within 270 days
of the statute’s enactment, in October
2006, the FDIC issued a temporary final
rule to implement the dividend
requirements of the Reform Act
(‘‘Temporary Final Rule’’). 71 FR 61385
(October 18, 2006).5
The Temporary Final Rule, which
will expire on December 31, 2008,
mirrors the dividend provisions of the
Reform Act, provides definitions
(including the definition of a
‘‘predecessor’’ depository institution) to
implement the statute and details how
an institution may request that the
FDIC’s Division of Finance (‘‘DOF’’)
review an FDIC determination of the
institution’s dividend amount and how
an institution may appeal the DOF’s
response to that request. In the
Temporary Final Rule, the FDIC
adopted a simple system for allocating
any dividends that might be declared
during the two-year duration of the
regulation. Any dividends awarded
before January 1, 2009, will be
distributed simply in proportion to an
institution’s 1996 assessment base ratio,
as determined pursuant to the one-time
assessment credit rule. 12 CFR 327.53.
In publishing the Temporary Final
Rule, the FDIC stated its intention to
initiate a second, more comprehensive
notice-and-comment rulemaking on
dividends beginning with an advanced
notice of proposed rulemaking to
explore alternative methods for
distributing future dividends after the
temporary dividend rules expired on
December 31, 2008. The publication of
the assessment dividend advance notice
of proposed rulemaking in September
2007 (‘‘ANPR’’) commenced that
process. 72 FR 53181 (September 18,
2007).
C. The Advanced Notice of Proposed
Rulemaking
In the ANPR the FDIC presented two
general approaches to allocating
dividends—the fund balance method
and the payments method.6
The Fund Balance Method
Under the fund balance method, every
quarter, each institution would be
assigned a dollar portion of the fund
balance (its fund allocation), solely for
purposes of determining the
institution’s dividend share. Each
institution’s most recent fund allocation
(as a percentage of the fund balance)
would determine its share of any
dividend. The fund allocation would
increase or decrease each quarter
depending upon fund performance and
assessments paid by each institution.
Specifically:
• Initially, the December 31, 2006
fund balance would be divided up
among institutions in proportion to
1996 assessment bases. Thus, initially,
each institution’s fund allocation would
equal its 1996 ratio times the December
31, 2006 fund balance.
• Thereafter, from quarter to quarter,
fund allocations would grow or shrink
depending upon the performance of the
fund.
• In addition, each ‘‘eligible’’
premium would increase an
institution’s fund allocation, dollar for
dollar. An ‘‘eligible’’ premium would be
the portion of an institution’s premium
that would count toward increasing its
share of dividends.
• Possible definitions for an eligible
premium include: (1) All premiums
charged; (2) premiums charged up to the
lowest rate charged a Risk Category I
institution; or (3) something in between,
for example, premiums charged up to
the maximum rate for a Risk Category I
institution, in all cases minus any credit
use.7 Ineligible premiums would be
those paid through the use of credits or
those paid in cash at rates in excess of
the eligible premium rate.
The Payments Method
Under the payments method an
institution’s share of any dividend
would depend upon its (and its
predecessors’) 1996 assessment base,
weighted in some manner, and its
quarterly assessments. Specifically:
• At the start of the new assessments
system, each institution’s dividend
share would depend upon its 1996
assessment base compared to all other
institutions, weighted in some manner.
• The resulting value assigned to each
institution based on its 1996 ratio could
either remain unchanged or be assigned
a declining weight over time.
• The possible definitions of an
eligible (and an ineligible) premium are
the same as those under the fund
balance method. (However, under
certain variations of this method
discussed below, assessments offset
through credit use could increase an
institution’s dividend share.)
• Cumulative eligible premiums paid
into the fund since 1996 would add to
an institution’s share.
• Alternatively, the FDIC could count
only eligible premiums paid over some
recent period, for example, the most
recent 3, 5, 10 or 15 years. In contrast,
the fund balance method would
necessarily take into account all
assessment payments made under the
new assessment system.
• Another variation would allow the
FDIC to subtract dividends paid to an
institution from its eligible premiums.
The ANPR presented two illustrative
variations of the payments method.
Under Variation 1, the Board could, as
under the fund balance method, initially
divide the 2006 fund balance based on
each institution’s share of the December
1996 assessment base. Eligible
premiums after 1996 would be added to
that amount. Under Variation 2, only
premiums paid over some prior period
(such as the previous 15 years) would be
considered. When the prior period
covered any year before 2007, the years
1997 through 2006 would be skipped,
since the great majority of institutions
paid no deposit insurance premiums
then. Thus, for example, to determine
dividend shares at the end of 2009, the
method would consider premiums paid
from 1985 through 1996 and from 2007
through 2009. Premiums paid during
2007, 2008 and 2009 would include
only eligible premiums. However,
because the weight accorded the 1996
ratio would effectively decline to zero
over time, eligible premiums after 2006
would include eligible premiums offset
with credits. An eligible premium paid
VerDate Aug<31>2005 16:41 Mar 21, 2008 Jkt 214001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\24MRP1.SGM 24MRP1
pwalker on PROD1PC71 with PROPOSALS
Corporation (‘‘FICO’’) used to pay interest on
outstanding FICO bonds, although the FDIC collects
those assessments on behalf of FICO. Beginning in
1997, the FDIC collected separate FICO assessments
from both SAIF and BIF members.
5 Prior to issuing the temporary final rule, the
FDIC published and received comment on a
proposed temporary final rule. 71 FR 28804.
6 The sole focus of the ANPR was on the type of
assessment dividend allocation method the FDIC
should adopt. The ANPR indicated that whether
and how the FDIC should retain or revise the other
aspects of the Temporary Final Rule would be
addressed in this proposed rule.
7 However, an eligible premium would never be
negative.
3. That portion of assessments paid by
an insured depository institution
(including any predecessor) that reflects
higher levels of risk assumed by the
institution; and
4. Such other factors as the Board
deems appropriate.
The Reform Act expressly requires the
FDIC to prescribe by regulation the
method for calculating, declaring and
paying dividends. The dividend
regulation must include provisions
allowing an insured depository
institution a reasonable opportunity to
challenge administratively the amount
of dividends it is awarded. Under the
Reform Act, any review by the FDIC
pursuant to these administrative
procedures is final and not subject to
judicial review.
B. The Temporary Final Rule on
Assessment Dividends
In compliance with the Reform Act
requirement to issue regulations on
assessment dividends within 270 days
of the statute’s enactment, in October
2006, the FDIC issued a temporary final
rule to implement the dividend
requirements of the Reform Act
(‘‘Temporary Final Rule’’). 71 FR 61385
(October 18, 2006).5
The Temporary Final Rule, which
will expire on December 31, 2008,
mirrors the dividend provisions of the
Reform Act, provides definitions
(including the definition of a
‘‘predecessor’’ depository institution) to
implement the statute and details how
an institution may request that the
FDIC’s Division of Finance (‘‘DOF’’)
review an FDIC determination of the
institution’s dividend amount and how
an institution may appeal the DOF’s
response to that request. In the
Temporary Final Rule, the FDIC
adopted a simple system for allocating
any dividends that might be declared
during the two-year duration of the
regulation. Any dividends awarded
before January 1, 2009, will be
distributed simply in proportion to an
institution’s 1996 assessment base ratio,
as determined pursuant to the one-time
assessment credit rule. 12 CFR 327.53.
In publishing the Temporary Final
Rule, the FDIC stated its intention to
initiate a second, more comprehensive
notice-and-comment rulemaking on
dividends beginning with an advanced
notice of proposed rulemaking to
explore alternative methods for
distributing future dividends after the
temporary dividend rules expired on
December 31, 2008. The publication of
the assessment dividend advance notice
of proposed rulemaking in September
2007 (‘‘ANPR’’) commenced that
process. 72 FR 53181 (September 18,
2007).
C. The Advanced Notice of Proposed
Rulemaking
In the ANPR the FDIC presented two
general approaches to allocating
dividends—the fund balance method
and the payments method.6
The Fund Balance Method
Under the fund balance method, every
quarter, each institution would be
assigned a dollar portion of the fund
balance (its fund allocation), solely for
purposes of determining the
institution’s dividend share. Each
institution’s most recent fund allocation
(as a percentage of the fund balance)
would determine its share of any
dividend. The fund allocation would
increase or decrease each quarter
depending upon fund performance and
assessments paid by each institution.
Specifically:
• Initially, the December 31, 2006
fund balance would be divided up
among institutions in proportion to
1996 assessment bases. Thus, initially,
each institution’s fund allocation would
equal its 1996 ratio times the December
31, 2006 fund balance.
• Thereafter, from quarter to quarter,
fund allocations would grow or shrink
depending upon the performance of the
fund.
• In addition, each ‘‘eligible’’
premium would increase an
institution’s fund allocation, dollar for
dollar. An ‘‘eligible’’ premium would be
the portion of an institution’s premium
that would count toward increasing its
share of dividends.
• Possible definitions for an eligible
premium include: (1) All premiums
charged; (2) premiums charged up to the
lowest rate charged a Risk Category I
institution; or (3) something in between,
for example, premiums charged up to
the maximum rate for a Risk Category I
institution, in all cases minus any credit
use.7 Ineligible premiums would be
those paid through the use of credits or
those paid in cash at rates in excess of
the eligible premium rate.
The Payments Method
Under the payments method an
institution’s share of any dividend
would depend upon its (and its
predecessors’) 1996 assessment base,
weighted in some manner, and its
quarterly assessments. Specifically:
• At the start of the new assessments
system, each institution’s dividend
share would depend upon its 1996
assessment base compared to all other
institutions, weighted in some manner.
• The resulting value assigned to each
institution based on its 1996 ratio could
either remain unchanged or be assigned
a declining weight over time.
• The possible definitions of an
eligible (and an ineligible) premium are
the same as those under the fund
balance method. (However, under
certain variations of this method
discussed below, assessments offset
through credit use could increase an
institution’s dividend share.)
• Cumulative eligible premiums paid
into the fund since 1996 would add to
an institution’s share.
• Alternatively, the FDIC could count
only eligible premiums paid over some
recent period, for example, the most
recent 3, 5, 10 or 15 years. In contrast,
the fund balance method would
necessarily take into account all
assessment payments made under the
new assessment system.
• Another variation would allow the
FDIC to subtract dividends paid to an
institution from its eligible premiums.
The ANPR presented two illustrative
variations of the payments method.
Under Variation 1, the Board could, as
under the fund balance method, initially
divide the 2006 fund balance based on
each institution’s share of the December
1996 assessment base. Eligible
premiums after 1996 would be added to
that amount. Under Variation 2, only
premiums paid over some prior period
(such as the previous 15 years) would be
considered. When the prior period
covered any year before 2007, the years
1997 through 2006 would be skipped,
since the great majority of institutions
paid no deposit insurance premiums
then. Thus, for example, to determine
dividend shares at the end of 2009, the
method would consider premiums paid
from 1985 through 1996 and from 2007
through 2009. Premiums paid during
2007, 2008 and 2009 would include
only eligible premiums. However,
because the weight accorded the 1996
ratio would effectively decline to zero
over time, eligible premiums after 2006
would include eligible premiums offset
with credits. An eligible premium paid
VerDate Aug<31>2005 16:41 Mar 21, 2008 Jkt 214001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\24MRP1.SGM 24MRP1
pwalker on PROD1PC71 with PROPOSALS