73158 Federal Register / Vol. 73, No. 232 / Tuesday, December 2, 2008 / Rules and Regulations
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).
‘‘Second offense.’’ and adding
‘‘Subsequent offenses.’’ in its place.
■ e. Paragraph (c)(2)(ii) is amended by
removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ f. Paragraph (c)(2)(ii) is amended by
removing $27,500 and adding $32,000
in its place.
■ g. Paragraph (c)(2)(iii)(B) is amended
by removing $27,500 and adding
$32,000 in its place.
■ h. Paragraph (c)(2)(iii)(B) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ i. Paragraph (c)(2)(iii)(C) is amended
by removing $1,250,000 and adding
$1,375,000 in its place.
■ j. Paragraph (c)(2)(iii)(C) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ k. Paragraph (c)(3) introductory text is
amended by removing ‘‘December 31,
2004’’ and adding ‘‘December 31, 2008’’
in its place.
■ l. Paragraph (c)(3)(i) introductory text
is amended by removing $6,500 and
adding $7,500 in its place, by removing
$32,500 and adding $37,500 in its place,
and by removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ m. Paragraph (c)(3)(ii) is amended by
removing $27,000 and adding $32,000
in its place and by removing $1,250,000
and adding $1,375,000 in its place.
■ n. Paragraph (c)(3)(iii) is amended by
removing $6,500 and adding $7,500 in
its place.
■ o. Paragraph (c)(3)(vi) is amended by
removing $11,000 and adding $16,000
in its place.
■ p. Paragraph (c)(3)(ix) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $32,500 and
adding $37,500 in its place, and by
removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ q. Paragraph (c)(3)(xiv) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $65,000 wherever
it appears and adding $70,000 in its
place, by removing $325,000 and adding
$350,000 in its place, by removing
$130,000 and adding $140,000 in its
place, and by removing $625,000 and
adding $675,000 in its place.
■ r. Paragraph (c)(3)(xv) is amended by
removing $6,500 and adding $7,500 in
its place.
■ s. Paragraph (c)(3)(xvi) is amended by
removing $125,000 and adding $135,000
in its place.
■ t. A new paragraph (c)(3)(xvii) is
added as set forth below:
§ 308.132 Assessment of penalties.
* * * * *
(c) * * *
(2) * * *
(i) * * * Pursuant to the Debt
Collection Improvement Act of 1996, for
violations of paragraph (c)(2)(i) which
occur after December 31, 2008, the
following maximum Tier One penalty
amounts contained in paragraphs
(c)(2)(i)(A) and (B) of this section shall
apply for each day that the violation
continues.
* * * * *
(3) * * *
(xvii) Civil money penalties assessed
for violation of one-year restriction on
Federal examiners of financial
institutions. Pursuant to section 10(k) of
the Federal Deposit Insurance Act (12
U.S.C. 1820(k)), the Board of Directors
or its designee may assess a civil money
penalty of up to $250,000 against any
covered former Federal examiner of a
financial institution who, in violation of
section 1820(k) and within the one-year
period following termination of
government service as an employee,
serves as an officer, director, or
consultant of a financial or depository
institution, a holding company, or of
any other entity listed in section 10(k),
without the written waiver or
permission by the appropriate Federal
banking agency or authority under
section 1820(k)(5). Pursuant to the Debt
Collection Improvement Act of 1996, for
any violation of section 10(k) which
occurs after December 31, 2008, the
maximum penalty amount will increase
to $275,000.
By order of the Board of Directors, Federal
Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8–28407 Filed 12–1–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AD27
Assessment Dividends
AGENCY: Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a final
rule to implement the assessment
dividend requirements in the Federal
Deposit Insurance Reform Act of 2005
(the Reform Act) and the Federal
Deposit Insurance Reform Conforming
Amendments Act of 2005 (the
Amendments Act). The final rule will
take effect on January 1, 2009. It is the
follow-up to the temporary final rule on
assessment dividends that the FDIC
issued in October 2006, which expires
on December 31, 2008.
DATES: Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT:
Munsell W. St.Clair, Chief, Banking and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–
8967; Missy Craig, Senior Program
Analyst, Division of Insurance and
Research, (202) 898–8724; Donna
Saulnier, Manager, Assessment Policy
Section, Division of Finance, (703) 562–
6167; Joseph A. DiNuzzo, Counsel,
Legal Division, (202) 898–7349; or
Sheikha Kapoor, Senior Attorney, Legal
Division, (202) 898–3960.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit
Insurance Act (the FDI Act), as amended
by the Reform Act, requires the FDIC,
under most circumstances, to declare
dividends from the Deposit Insurance
Fund (the fund or the DIF) when the DIF
reserve ratio (the 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 (the 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
VerDate Aug<31>2005 20:11 Dec 01, 2008 Jkt 217001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\02DER1.SGM 02DER1
pwalker on PROD1PC71 with RULES
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).
‘‘Second offense.’’ and adding
‘‘Subsequent offenses.’’ in its place.
■ e. Paragraph (c)(2)(ii) is amended by
removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ f. Paragraph (c)(2)(ii) is amended by
removing $27,500 and adding $32,000
in its place.
■ g. Paragraph (c)(2)(iii)(B) is amended
by removing $27,500 and adding
$32,000 in its place.
■ h. Paragraph (c)(2)(iii)(B) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ i. Paragraph (c)(2)(iii)(C) is amended
by removing $1,250,000 and adding
$1,375,000 in its place.
■ j. Paragraph (c)(2)(iii)(C) is amended
by removing ‘‘December 31, 2004’’ and
adding ‘‘December 31, 2008’’ in its
place.
■ k. Paragraph (c)(3) introductory text is
amended by removing ‘‘December 31,
2004’’ and adding ‘‘December 31, 2008’’
in its place.
■ l. Paragraph (c)(3)(i) introductory text
is amended by removing $6,500 and
adding $7,500 in its place, by removing
$32,500 and adding $37,500 in its place,
and by removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ m. Paragraph (c)(3)(ii) is amended by
removing $27,000 and adding $32,000
in its place and by removing $1,250,000
and adding $1,375,000 in its place.
■ n. Paragraph (c)(3)(iii) is amended by
removing $6,500 and adding $7,500 in
its place.
■ o. Paragraph (c)(3)(vi) is amended by
removing $11,000 and adding $16,000
in its place.
■ p. Paragraph (c)(3)(ix) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $32,500 and
adding $37,500 in its place, and by
removing $1,250,000 wherever it
appears and adding $1,375,000 in its
place.
■ q. Paragraph (c)(3)(xiv) is amended by
removing $6,500 and adding $7,500 in
its place, by removing $65,000 wherever
it appears and adding $70,000 in its
place, by removing $325,000 and adding
$350,000 in its place, by removing
$130,000 and adding $140,000 in its
place, and by removing $625,000 and
adding $675,000 in its place.
■ r. Paragraph (c)(3)(xv) is amended by
removing $6,500 and adding $7,500 in
its place.
■ s. Paragraph (c)(3)(xvi) is amended by
removing $125,000 and adding $135,000
in its place.
■ t. A new paragraph (c)(3)(xvii) is
added as set forth below:
§ 308.132 Assessment of penalties.
* * * * *
(c) * * *
(2) * * *
(i) * * * Pursuant to the Debt
Collection Improvement Act of 1996, for
violations of paragraph (c)(2)(i) which
occur after December 31, 2008, the
following maximum Tier One penalty
amounts contained in paragraphs
(c)(2)(i)(A) and (B) of this section shall
apply for each day that the violation
continues.
* * * * *
(3) * * *
(xvii) Civil money penalties assessed
for violation of one-year restriction on
Federal examiners of financial
institutions. Pursuant to section 10(k) of
the Federal Deposit Insurance Act (12
U.S.C. 1820(k)), the Board of Directors
or its designee may assess a civil money
penalty of up to $250,000 against any
covered former Federal examiner of a
financial institution who, in violation of
section 1820(k) and within the one-year
period following termination of
government service as an employee,
serves as an officer, director, or
consultant of a financial or depository
institution, a holding company, or of
any other entity listed in section 10(k),
without the written waiver or
permission by the appropriate Federal
banking agency or authority under
section 1820(k)(5). Pursuant to the Debt
Collection Improvement Act of 1996, for
any violation of section 10(k) which
occurs after December 31, 2008, the
maximum penalty amount will increase
to $275,000.
By order of the Board of Directors, Federal
Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8–28407 Filed 12–1–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AD27
Assessment Dividends
AGENCY: Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a final
rule to implement the assessment
dividend requirements in the Federal
Deposit Insurance Reform Act of 2005
(the Reform Act) and the Federal
Deposit Insurance Reform Conforming
Amendments Act of 2005 (the
Amendments Act). The final rule will
take effect on January 1, 2009. It is the
follow-up to the temporary final rule on
assessment dividends that the FDIC
issued in October 2006, which expires
on December 31, 2008.
DATES: Effective Date: January 1, 2009.
FOR FURTHER INFORMATION CONTACT:
Munsell W. St.Clair, Chief, Banking and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–
8967; Missy Craig, Senior Program
Analyst, Division of Insurance and
Research, (202) 898–8724; Donna
Saulnier, Manager, Assessment Policy
Section, Division of Finance, (703) 562–
6167; Joseph A. DiNuzzo, Counsel,
Legal Division, (202) 898–7349; or
Sheikha Kapoor, Senior Attorney, Legal
Division, (202) 898–3960.
SUPPLEMENTARY INFORMATION:
I. Background
A. Reform Act Requirements
Section 7(e)(2) of the Federal Deposit
Insurance Act (the FDI Act), as amended
by the Reform Act, requires the FDIC,
under most circumstances, to declare
dividends from the Deposit Insurance
Fund (the fund or the DIF) when the DIF
reserve ratio (the 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 (the 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
VerDate Aug<31>2005 20:11 Dec 01, 2008 Jkt 217001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\02DER1.SGM 02DER1
pwalker on PROD1PC71 with RULES
73159Federal Register / Vol. 73, No. 232 / Tuesday, December 2, 2008 / Rules and Regulations
2 This provision allows the FDIC’s Board to
suspend or limit dividends in circumstances where
the Reserve Ratio exceeds 1.5 percent, if the Board
makes a determination to continue a suspension or
limitation that it 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 (the BIF) or the Savings
Association Insurance Fund (the SAIF)) and does
not include assessments paid to the Financing
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 71 FR 61385 (October 18, 2006).
6 12 CFR 327.53. No dividend has or will be
issued under the Temporary Final Rule.
7 72 FR 53181 (September 18, 2007).
8 73 FR 15459 (Mar. 24, 2008).
9 The two banking trade associations generally
promoted conservative fund management as the
optimal strategy for solving the dividend allocation
issue. They both stated that FDIC fund management
should ensure that the fund be kept beneath the
1.35 percent statutory level so that dividends were
not triggered. Low, smooth, steady premiums that
prevent a dividend trigger would obviate the issue
of how to equitably distribute dividends between
the older and newer segments of the banking
industry. One of the associations stated that such
a policy would benefit the insurance fund, the
industry in general, and consumers.
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
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 October 2006, the FDIC issued a
temporary final rule to implement the
dividend requirements of the Reform
Act (the Temporary Final Rule).5
The Temporary Final Rule, which
expires on December 31, 2008, provides
definitions and details on how an
institution may request FDIC review of
a determination of the institution’s
dividend and how an institution may
appeal the FDIC’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.6
C. The Advance Notice of Proposed
Rulemaking and Notice of Proposed
Rulemaking
At the time it adopted 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 expires on December 31, 2008. The
publication of the assessment dividend
advance notice of rulemaking in
September 2007 (the ANPR)
commenced that process.7 Subsequently
in March 2008, based upon comments
received on the ANPR, the FDIC issued
a proposed rule on the distribution of
future dividends (the NPR).8
II. The Final Rule
The FDIC is adopting a final rule
identical to the proposed rule, with a
few exceptions described below.
The FDIC received three comment
letters on the proposed rule: two from
banking trade associations and one from
a savings association. The savings
association generally supported the
proposed rule. One trade association
stated that the proposal generally met
the specifications that the association
had suggested in its comments on the
ANPR, although the association would
not endorse the NPR. The other trade
association supported many specific
provisions of the proposed rule. Each of
the comments had some specific
suggestions that are discussed further
below.
Annual Determination of Whether
Dividends Are Required/Declaration of
Dividends
The process under the final rule for
the annual determination of dividends
and declaration of dividends is identical
with the process under the proposed
rule. The FDIC will determine annually
whether the reserve ratio at the end of
the prior year equaled or exceeded 1.35
percent of estimated insured deposits or
1.50 percent, thereby triggering a
dividend requirement. If a dividend is
triggered, the FDIC will determine,
based on statutory factors, whether
payment of dividends should be limited
or suspended. If the FDIC does not limit
or suspend payment, or does not renew
such a determination, the aggregate
amount of the dividend under the final
rule will be determined as provided by
the Reform Act. The FDIC will declare
any dividend on or before May 10th of
the year following the year in which the
reserve ratio exceeded 1.35 percent or
1.50 percent.9
The FDIC received one specific
comment on this part of the proposal.
One of the trade associations endorsed
an accelerated annual process for
determination and distribution of
dividends.
Allocation of Dividends
The final rule adopts the proposed
rule’s methodology for allocation of
dividends. The total dividend in any
year will be divided into two parts. One
of the two parts will be allocated based
on the ratio of each institution’s
(including any predecessors’) 1996
assessment base compared to the total of
all existing eligible institutions’ 1996
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pwalker on PROD1PC71 with RULES
2 This provision allows the FDIC’s Board to
suspend or limit dividends in circumstances where
the Reserve Ratio exceeds 1.5 percent, if the Board
makes a determination to continue a suspension or
limitation that it 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 (the BIF) or the Savings
Association Insurance Fund (the SAIF)) and does
not include assessments paid to the Financing
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 71 FR 61385 (October 18, 2006).
6 12 CFR 327.53. No dividend has or will be
issued under the Temporary Final Rule.
7 72 FR 53181 (September 18, 2007).
8 73 FR 15459 (Mar. 24, 2008).
9 The two banking trade associations generally
promoted conservative fund management as the
optimal strategy for solving the dividend allocation
issue. They both stated that FDIC fund management
should ensure that the fund be kept beneath the
1.35 percent statutory level so that dividends were
not triggered. Low, smooth, steady premiums that
prevent a dividend trigger would obviate the issue
of how to equitably distribute dividends between
the older and newer segments of the banking
industry. One of the associations stated that such
a policy would benefit the insurance fund, the
industry in general, and consumers.
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
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 October 2006, the FDIC issued a
temporary final rule to implement the
dividend requirements of the Reform
Act (the Temporary Final Rule).5
The Temporary Final Rule, which
expires on December 31, 2008, provides
definitions and details on how an
institution may request FDIC review of
a determination of the institution’s
dividend and how an institution may
appeal the FDIC’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.6
C. The Advance Notice of Proposed
Rulemaking and Notice of Proposed
Rulemaking
At the time it adopted 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 expires on December 31, 2008. The
publication of the assessment dividend
advance notice of rulemaking in
September 2007 (the ANPR)
commenced that process.7 Subsequently
in March 2008, based upon comments
received on the ANPR, the FDIC issued
a proposed rule on the distribution of
future dividends (the NPR).8
II. The Final Rule
The FDIC is adopting a final rule
identical to the proposed rule, with a
few exceptions described below.
The FDIC received three comment
letters on the proposed rule: two from
banking trade associations and one from
a savings association. The savings
association generally supported the
proposed rule. One trade association
stated that the proposal generally met
the specifications that the association
had suggested in its comments on the
ANPR, although the association would
not endorse the NPR. The other trade
association supported many specific
provisions of the proposed rule. Each of
the comments had some specific
suggestions that are discussed further
below.
Annual Determination of Whether
Dividends Are Required/Declaration of
Dividends
The process under the final rule for
the annual determination of dividends
and declaration of dividends is identical
with the process under the proposed
rule. The FDIC will determine annually
whether the reserve ratio at the end of
the prior year equaled or exceeded 1.35
percent of estimated insured deposits or
1.50 percent, thereby triggering a
dividend requirement. If a dividend is
triggered, the FDIC will determine,
based on statutory factors, whether
payment of dividends should be limited
or suspended. If the FDIC does not limit
or suspend payment, or does not renew
such a determination, the aggregate
amount of the dividend under the final
rule will be determined as provided by
the Reform Act. The FDIC will declare
any dividend on or before May 10th of
the year following the year in which the
reserve ratio exceeded 1.35 percent or
1.50 percent.9
The FDIC received one specific
comment on this part of the proposal.
One of the trade associations endorsed
an accelerated annual process for
determination and distribution of
dividends.
Allocation of Dividends
The final rule adopts the proposed
rule’s methodology for allocation of
dividends. The total dividend in any
year will be divided into two parts. One
of the two parts will be allocated based
on the ratio of each institution’s
(including any predecessors’) 1996
assessment base compared to the total of
all existing eligible institutions’ 1996
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