26078 Federal Register / Vol. 61, No. 102 / Friday, May 24, 1996 / Rules and Regulations
tested for insulation imperfections in
accordance with § 1755.702(e)(7) and
§ 1755.703(b)(5), respectively.
(2) Capability tests. Tests on a quality
assurance basis shall be made as
frequently as is required for each
manufacturer to determine and maintain
compliance with:
(i) Performance of the conductors;
(ii) Performance of the conductor
insulation and jacket material;
(iii) Sequential marking and lettering;
(iv) Mutual capacitance, capacitance
unbalance, attenuation, and crosstalk;
(v) Conductor resistance, resistance
unbalance, and insulation resistance;
(vi) Dielectric strength and fusing
coordination;
(vii) Impact, abrasion, static load,
elongation, and plasticizer compatibility
tests; and
(viii) Cold temperature handling, light
absorption, low temperature separation,
and flammability tests.
(c) Summary of records of electrical
and physical tests. (1) Each
manufacturer shall maintain suitable
summary records for a period of at least
3 years of all electrical and physical
tests required on completed wire as set
forth in paragraph (b) of this section.
The test data for a particular lot of aerial
service wire shall be in a form such that
it may be readily available to the
purchaser or to RUS upon request.
(2) Measurements and computed
values shall be rounded off to the
number of places or figures specified for
the requirement according to ANSI/
ICEA S–89–648–1993, paragraph 1.3.
(d) Manufacturing irregularities. (1)
Repairs to the insulation of CCSR aerial
service wires are not permitted in wires
supplied to end users under §§ 1755.700
through 1755.704.
(2) Repairs to the jacket of NMR aerial
service wires are not permitted in wires
supplied to end users under §§ 1755.700
through 1755.704.
(e) Splicing. Splicing of completed
CCSR and NMR aerial service wires
shall comply with the requirement
specified in ANSI/ICEA S–89–648–
1993, paragraph 8.1.1.
(f) Preparation for shipment. (1) CCSR
and NMR aerial service wire shall be
shipped either in coils or on reels.
(2) When CCSR and NMR aerial
service wires are shipped on reels the
following provisions shall apply:
(i) The diameter of the drum shall be
large enough to prevent damage to the
wire from reeling or unreeling. The reels
shall be substantial and so constructed
as to prevent damage to the wire during
shipment and handling;
(ii) A waterproof corrugated board or
other suitable means of protection
accepted by RUS prior to its use may be
applied to the reel. If the waterproof
corrugated board or other suitable
material is used for protection, it shall
be suitably secured in place to prevent
damage to the wire during storage and
handling. The use of the waterproof
corrugated board or other suitable
means of protection shall be at the
option of the manufacturer unless
specified by the end user;
(iii) The outer end of the wire shall be
securely fastened to the reel head so as
to prevent the wire from becoming loose
in transit. The inner end of the wire
shall be securely fastened in such a way
as to make it readily available if
required for electrical testing. Spikes,
staples, or other fastening devices which
penetrate the conductor insulation of
the CCSR aerial service wire and the
jacket of the NMR aerial service wire
shall not be used. The method of
fastening the wire ends shall be
accepted by RUS prior to their use;
(iv) Each length of wire shall be
wound on a separate reel;
(v) Each reel shall be plainly marked
to indicate the direction in which it
should be rolled to prevent loosening of
the wire on the reel; and
(vi) Each reel shall be stenciled or
labeled on either one or both sides with
the following information:
(A) Customer order number;
(B) Manufacturer’s name and product
code;
(C) Factory reel number and year of
manufacture;
(D) Gauge of conductors and pair size
of wire;
(E) Length of wire; and
(F) RUS designation letter ‘‘K.’’
(3) When CCSR and NMR aerial
service wires are shipped in coils the
following provisions shall apply:
(i) The diameter of the coil shall be
large enough to prevent damage to the
wire from coiling or uncoiling;
(ii) The nominal length of the wire in
a coil shall be 305 meters (1,000 feet).
No coil shall be less than 290 meters
(950 feet) long or more than 460 meters
(1,500 feet) long; however, 25 percent of
the total number of coils may be less
than 305 meters (1,000 feet);
(iii) The coils of wire shall be wound
securely with strong tape in four
separate evenly spaced places;
(iv) The coils may be protected from
damage by wrapping the coil with heavy
paper, burlap, or other suitable material
accepted by RUS prior to its use. The
use of the heavy paper, burlap, or other
suitable means of protection shall be at
the option of the manufacturer unless
specified by the end user; and
(v) Each coil shall be tagged with the
following information:
(A) Customer order number;
(B) Manufacturer’s name and product
code;
(C) Year of manufacture;
(D) Gauge of conductors and pair size
of wire;
(E) Length of wire; and
(F) RUS designation letter ‘‘K.’’
(4) In lieu of wrapping the coil with
heavy paper, burlap, or other suitable
material, the coil may be packaged in a
moisture resistant carton.
(5) When the coils are shipped in
moisture resistant cartons, each carton
shall be marked with the information
specified in paragraphs (f)(3)(v)(A)
through (f)(3)(v)(F) of this section.
(6) Other methods of shipment may be
used if accepted by RUS prior to their
use.
(7) When NMR aerial service wire is
shipped, the ends of the wire shall be
sealed in accordance with ANSI/ICEA
S–89–648–1993, paragraph 9.2.
Dated: May 10, 1996.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 96–12834 Filed 5–23–96; 8:45 am]
BILLING CODE 3410–15–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
Assessments; Continuation of
Adjusted Rate Schedule for BIF-
Assessable Deposits
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Continuation of adjusted rate
schedule.
SUMMARY: On May 14, 1996, the Board
of Directors of the FDIC (Board) adopted
a resolution to continue in effect the
current downward adjustment to the
assessment rate schedule applicable to
deposits assessable by the Bank
Insurance Fund (BIF). The continuation
of the downward adjustment will apply
to the semiannual assessment period
beginning July 1, 1996. As a result, the
BIF assessment rates will continue to
range from 0 to 27 basis points. This rate
schedule will result in an estimated
average annual assessment rate of
approximately 0.29 basis points; the
estimated annual revenue produced by
this rate schedule will be $72 million.
EFFECTIVE DATE: July 1, 1996, through
December 31, 1996.
FOR FURTHER INFORMATION CONTACT:
Frederick S. Carns, Assistant Director,
Division of Insurance, (202) 898–3930;
Christine E. Blair, Financial Economist,
Division of Research and Statistics,
tested for insulation imperfections in
accordance with § 1755.702(e)(7) and
§ 1755.703(b)(5), respectively.
(2) Capability tests. Tests on a quality
assurance basis shall be made as
frequently as is required for each
manufacturer to determine and maintain
compliance with:
(i) Performance of the conductors;
(ii) Performance of the conductor
insulation and jacket material;
(iii) Sequential marking and lettering;
(iv) Mutual capacitance, capacitance
unbalance, attenuation, and crosstalk;
(v) Conductor resistance, resistance
unbalance, and insulation resistance;
(vi) Dielectric strength and fusing
coordination;
(vii) Impact, abrasion, static load,
elongation, and plasticizer compatibility
tests; and
(viii) Cold temperature handling, light
absorption, low temperature separation,
and flammability tests.
(c) Summary of records of electrical
and physical tests. (1) Each
manufacturer shall maintain suitable
summary records for a period of at least
3 years of all electrical and physical
tests required on completed wire as set
forth in paragraph (b) of this section.
The test data for a particular lot of aerial
service wire shall be in a form such that
it may be readily available to the
purchaser or to RUS upon request.
(2) Measurements and computed
values shall be rounded off to the
number of places or figures specified for
the requirement according to ANSI/
ICEA S–89–648–1993, paragraph 1.3.
(d) Manufacturing irregularities. (1)
Repairs to the insulation of CCSR aerial
service wires are not permitted in wires
supplied to end users under §§ 1755.700
through 1755.704.
(2) Repairs to the jacket of NMR aerial
service wires are not permitted in wires
supplied to end users under §§ 1755.700
through 1755.704.
(e) Splicing. Splicing of completed
CCSR and NMR aerial service wires
shall comply with the requirement
specified in ANSI/ICEA S–89–648–
1993, paragraph 8.1.1.
(f) Preparation for shipment. (1) CCSR
and NMR aerial service wire shall be
shipped either in coils or on reels.
(2) When CCSR and NMR aerial
service wires are shipped on reels the
following provisions shall apply:
(i) The diameter of the drum shall be
large enough to prevent damage to the
wire from reeling or unreeling. The reels
shall be substantial and so constructed
as to prevent damage to the wire during
shipment and handling;
(ii) A waterproof corrugated board or
other suitable means of protection
accepted by RUS prior to its use may be
applied to the reel. If the waterproof
corrugated board or other suitable
material is used for protection, it shall
be suitably secured in place to prevent
damage to the wire during storage and
handling. The use of the waterproof
corrugated board or other suitable
means of protection shall be at the
option of the manufacturer unless
specified by the end user;
(iii) The outer end of the wire shall be
securely fastened to the reel head so as
to prevent the wire from becoming loose
in transit. The inner end of the wire
shall be securely fastened in such a way
as to make it readily available if
required for electrical testing. Spikes,
staples, or other fastening devices which
penetrate the conductor insulation of
the CCSR aerial service wire and the
jacket of the NMR aerial service wire
shall not be used. The method of
fastening the wire ends shall be
accepted by RUS prior to their use;
(iv) Each length of wire shall be
wound on a separate reel;
(v) Each reel shall be plainly marked
to indicate the direction in which it
should be rolled to prevent loosening of
the wire on the reel; and
(vi) Each reel shall be stenciled or
labeled on either one or both sides with
the following information:
(A) Customer order number;
(B) Manufacturer’s name and product
code;
(C) Factory reel number and year of
manufacture;
(D) Gauge of conductors and pair size
of wire;
(E) Length of wire; and
(F) RUS designation letter ‘‘K.’’
(3) When CCSR and NMR aerial
service wires are shipped in coils the
following provisions shall apply:
(i) The diameter of the coil shall be
large enough to prevent damage to the
wire from coiling or uncoiling;
(ii) The nominal length of the wire in
a coil shall be 305 meters (1,000 feet).
No coil shall be less than 290 meters
(950 feet) long or more than 460 meters
(1,500 feet) long; however, 25 percent of
the total number of coils may be less
than 305 meters (1,000 feet);
(iii) The coils of wire shall be wound
securely with strong tape in four
separate evenly spaced places;
(iv) The coils may be protected from
damage by wrapping the coil with heavy
paper, burlap, or other suitable material
accepted by RUS prior to its use. The
use of the heavy paper, burlap, or other
suitable means of protection shall be at
the option of the manufacturer unless
specified by the end user; and
(v) Each coil shall be tagged with the
following information:
(A) Customer order number;
(B) Manufacturer’s name and product
code;
(C) Year of manufacture;
(D) Gauge of conductors and pair size
of wire;
(E) Length of wire; and
(F) RUS designation letter ‘‘K.’’
(4) In lieu of wrapping the coil with
heavy paper, burlap, or other suitable
material, the coil may be packaged in a
moisture resistant carton.
(5) When the coils are shipped in
moisture resistant cartons, each carton
shall be marked with the information
specified in paragraphs (f)(3)(v)(A)
through (f)(3)(v)(F) of this section.
(6) Other methods of shipment may be
used if accepted by RUS prior to their
use.
(7) When NMR aerial service wire is
shipped, the ends of the wire shall be
sealed in accordance with ANSI/ICEA
S–89–648–1993, paragraph 9.2.
Dated: May 10, 1996.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 96–12834 Filed 5–23–96; 8:45 am]
BILLING CODE 3410–15–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
Assessments; Continuation of
Adjusted Rate Schedule for BIF-
Assessable Deposits
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Continuation of adjusted rate
schedule.
SUMMARY: On May 14, 1996, the Board
of Directors of the FDIC (Board) adopted
a resolution to continue in effect the
current downward adjustment to the
assessment rate schedule applicable to
deposits assessable by the Bank
Insurance Fund (BIF). The continuation
of the downward adjustment will apply
to the semiannual assessment period
beginning July 1, 1996. As a result, the
BIF assessment rates will continue to
range from 0 to 27 basis points. This rate
schedule will result in an estimated
average annual assessment rate of
approximately 0.29 basis points; the
estimated annual revenue produced by
this rate schedule will be $72 million.
EFFECTIVE DATE: July 1, 1996, through
December 31, 1996.
FOR FURTHER INFORMATION CONTACT:
Frederick S. Carns, Assistant Director,
Division of Insurance, (202) 898–3930;
Christine E. Blair, Financial Economist,
Division of Research and Statistics,
26079Federal Register / Vol. 61, No. 102 / Friday, May 24, 1996 / Rules and Regulations
(202) 898–3936; James R. McFadyen,
Senior Financial Analyst, Division of
Research and Statistics, (202) 898–7027;
Christopher L. Hencke, Counsel, Legal
Division, (202) 898–8839; Federal
Deposit Insurance Corporation, 550 17th
Street, N.W., Washington, D.C., 20429.
SUPPLEMENTARY INFORMATION:
I. Continuation of Adjustment to Rate
Schedule 2
Section 7(b) of the Federal Deposit
Insurance Act, 12 U.S.C. 1817(b),
provides that the Board shall set
semiannual assessments for insured
depository institutions. On August 8,
1995, the Board adopted a new
assessment rate schedule for deposits
subject to assessment by the BIF. 60 FR
42680 (August 16, 1995). The new
schedule was codified as Rate Schedule
2 at 12 CFR 327.9(a). This schedule
provided for an assessment-rate range of
4 to 31 basis points and became
effective retroactively on June 1, 1995,
the beginning of the month following
the month in which the BIF reached its
designated reserve ratio (DRR) of 1.25
percent of total estimated insured
deposits.
In adopting Rate Schedule 2, the
Board also amended the FDIC’s
assessment regulations to permit the
Board to make limited adjustments to
the schedule without notice-and-
comment rulemaking. Any such
adjustments can be made as the Board
deems necessary to maintain the BIF
reserve ratio at the DRR and can be
accomplished by Board resolution.
Under this provision, codified at 12 CFR
327.9(b), any such adjustment must not
exceed an increase or decrease of 5 basis
points and must be uniform across the
rate schedule.
The amount of an adjustment adopted
by the Board under 12 CFR 327.9(b) is
to be determined by the following
considerations: (1) the amount of
assessment revenue necessary to
maintain the reserve ratio at the DRR;
and (2) the assessment schedule that
would generate such amount of
assessment revenue considering the risk
profile of BIF members. In determining
the relevant amount of assessment
revenue, the Board is to consider BIF’s
expected operating expenses, case
resolution expenditures and income, the
effect of assessments on BIF members’
earnings and capital, and any other
factors the Board may deem appropriate.
Having considered all of these factors,
the Board decided on November 14,
1995, to adopt an adjustment factor of
4 basis points for the semiannual
assessment period beginning January 1,
1996, with a resulting adjusted schedule
ranging from 0 to 27 basis points. 60 FR
63400 (December 11, 1995). The Board
has now decided to adopt the same
adjustments to Rate Schedule 2 for the
upcoming semiannual period from July
1, 1996 to December 31, 1996. The
adjusted rate schedule is set forth
below.
BIF R ATE SCHEDULE AS ADJUSTED
FOR THE SECOND SEMIANNUAL PE-
RIOD OF 1996
Capital group Supervisory subgroup
A B C
1 ........................ 1 0 3 17
2 ........................ 3 10 24
3 ........................ 10 24 27
1 Subject to a statutory minimum assess-
ment of $1,000 per semiannual period (which
also applies to all other assessment risk clas-
sifications).
The basis for the Board’s decision is
discussed below.
II. Basis for the Adjustment
A. Maintaining at the Designated
Reserve Ratio
In adopting a rate adjustment under
12 CFR 327.9(b), as mentioned above,
the Board must consider the following:
(1) the amount of assessment revenue
necessary to maintain the reserve ratio
at the DRR; and (2) the assessment
schedule that would generate such
amount of assessment revenue
considering the risk profile of BIF
members.
The BIF reserve ratio stood at 1.30
percent as of December 31, 1995, the
latest date for which complete data are
available. Assuming that insured
deposit growth during the first half of
1996 falls within the range of 2 percent
shrinkage to 6 percent growth annually,
and assuming that insurance losses
remain moderate as expected, the BIF
ratio will range from 1.29 to 1.34
percent at midyear 1996 (Table 1).
For the second half of 1996, insurance
losses and operating expenses are
expected to total under $350 million,
while assessments plus investment
income will exceed $650 million.
Insured deposit growth for 1996 is
subject to considerable uncertainty, as
recent experience has been mixed. From
1991 through early 1995, the growth rate
of BIF-insured deposits was essentially
zero but, for the year ending in
December 1995, BIF-insured deposits
grew by 3 percent, with much of this
growth occurring in the fourth quarter.
In light of the 1995 experience, as well
as considerable volatility in deposit
growth experienced during the 1980s,
the FDIC must consider the possibility
that BIF-insured deposits could grow at
a 6 percent annual rate throughout 1996.
Table 1 indicates the year-end 1996
range for the BIF reserve ratio, assuming
a 6 percent upper bound for annual
deposit growth in 1996 and assuming
that the values of other variables
affecting the reserve ratio in the second
semiannual period will fall within their
historical ranges. While the lower
bound on the year-end BIF reserve ratio
is below the 1.25 percent target, this
presumes an unexpected increase in
insurance losses/provisions of $600
million. Such an increase is consistent
with the historical experience of the
FDIC, but it must be viewed as a remote
possibility in light of the current
economic environment and the near-
term outlook.
The stronger possibility is that
insured-deposit growth rates could
exceed forecasts based upon historical
experience. While the 6 percent upper
bound for deposit growth included in
Table 1 is high relative to the experience
of the 1990s, the FDIC cannot rule out
such a rate of growth in response to the
dramatic reductions in BIF assessment
rates that were effected in the second
half of 1995.
Moreover, given the prospect of a
continuing, large premium differential
between the insurance funds, there is a
realistic possibility of substantial
deposit migration from the SAIF to the
BIF. Though the law imposes
constraints on at least some forms of
deposit-shifting from one fund to
another, such constraints may be
countered by adaptations in the
marketplace. The relatively low rate of
migration to date is not likely to be
indicative of the rate to be expected
going forward, given that many market
participants may have delayed any
plans to migrate deposits in anticipation
of a legislative solution. In the absence
of a legislative solution to date, the FDIC
believes that there is a realistic
possibility of a significant increase in
deposit migration. However, the precise
timing and ultimate magnitude of any
increase is uncertain.
For illustration, Table 2 examines the
impact on the year-end BIF reserve ratio
of alternative deposit migration rates
during the second semiannual period of
1996. Columns 2 through 4 of the table
indicate the impact of deposit migration
rates under three different assumptions
concerning ‘‘normal’’ growth of BIF-
insured deposits (growth that is not due
to migration) for 1996. For example, the
ratios in the third column are derived
under the assumption that normal
deposit growth is 2 percent for 1996
(full year); assuming also that no deposit
migration occurs during the year, the
(202) 898–3936; James R. McFadyen,
Senior Financial Analyst, Division of
Research and Statistics, (202) 898–7027;
Christopher L. Hencke, Counsel, Legal
Division, (202) 898–8839; Federal
Deposit Insurance Corporation, 550 17th
Street, N.W., Washington, D.C., 20429.
SUPPLEMENTARY INFORMATION:
I. Continuation of Adjustment to Rate
Schedule 2
Section 7(b) of the Federal Deposit
Insurance Act, 12 U.S.C. 1817(b),
provides that the Board shall set
semiannual assessments for insured
depository institutions. On August 8,
1995, the Board adopted a new
assessment rate schedule for deposits
subject to assessment by the BIF. 60 FR
42680 (August 16, 1995). The new
schedule was codified as Rate Schedule
2 at 12 CFR 327.9(a). This schedule
provided for an assessment-rate range of
4 to 31 basis points and became
effective retroactively on June 1, 1995,
the beginning of the month following
the month in which the BIF reached its
designated reserve ratio (DRR) of 1.25
percent of total estimated insured
deposits.
In adopting Rate Schedule 2, the
Board also amended the FDIC’s
assessment regulations to permit the
Board to make limited adjustments to
the schedule without notice-and-
comment rulemaking. Any such
adjustments can be made as the Board
deems necessary to maintain the BIF
reserve ratio at the DRR and can be
accomplished by Board resolution.
Under this provision, codified at 12 CFR
327.9(b), any such adjustment must not
exceed an increase or decrease of 5 basis
points and must be uniform across the
rate schedule.
The amount of an adjustment adopted
by the Board under 12 CFR 327.9(b) is
to be determined by the following
considerations: (1) the amount of
assessment revenue necessary to
maintain the reserve ratio at the DRR;
and (2) the assessment schedule that
would generate such amount of
assessment revenue considering the risk
profile of BIF members. In determining
the relevant amount of assessment
revenue, the Board is to consider BIF’s
expected operating expenses, case
resolution expenditures and income, the
effect of assessments on BIF members’
earnings and capital, and any other
factors the Board may deem appropriate.
Having considered all of these factors,
the Board decided on November 14,
1995, to adopt an adjustment factor of
4 basis points for the semiannual
assessment period beginning January 1,
1996, with a resulting adjusted schedule
ranging from 0 to 27 basis points. 60 FR
63400 (December 11, 1995). The Board
has now decided to adopt the same
adjustments to Rate Schedule 2 for the
upcoming semiannual period from July
1, 1996 to December 31, 1996. The
adjusted rate schedule is set forth
below.
BIF R ATE SCHEDULE AS ADJUSTED
FOR THE SECOND SEMIANNUAL PE-
RIOD OF 1996
Capital group Supervisory subgroup
A B C
1 ........................ 1 0 3 17
2 ........................ 3 10 24
3 ........................ 10 24 27
1 Subject to a statutory minimum assess-
ment of $1,000 per semiannual period (which
also applies to all other assessment risk clas-
sifications).
The basis for the Board’s decision is
discussed below.
II. Basis for the Adjustment
A. Maintaining at the Designated
Reserve Ratio
In adopting a rate adjustment under
12 CFR 327.9(b), as mentioned above,
the Board must consider the following:
(1) the amount of assessment revenue
necessary to maintain the reserve ratio
at the DRR; and (2) the assessment
schedule that would generate such
amount of assessment revenue
considering the risk profile of BIF
members.
The BIF reserve ratio stood at 1.30
percent as of December 31, 1995, the
latest date for which complete data are
available. Assuming that insured
deposit growth during the first half of
1996 falls within the range of 2 percent
shrinkage to 6 percent growth annually,
and assuming that insurance losses
remain moderate as expected, the BIF
ratio will range from 1.29 to 1.34
percent at midyear 1996 (Table 1).
For the second half of 1996, insurance
losses and operating expenses are
expected to total under $350 million,
while assessments plus investment
income will exceed $650 million.
Insured deposit growth for 1996 is
subject to considerable uncertainty, as
recent experience has been mixed. From
1991 through early 1995, the growth rate
of BIF-insured deposits was essentially
zero but, for the year ending in
December 1995, BIF-insured deposits
grew by 3 percent, with much of this
growth occurring in the fourth quarter.
In light of the 1995 experience, as well
as considerable volatility in deposit
growth experienced during the 1980s,
the FDIC must consider the possibility
that BIF-insured deposits could grow at
a 6 percent annual rate throughout 1996.
Table 1 indicates the year-end 1996
range for the BIF reserve ratio, assuming
a 6 percent upper bound for annual
deposit growth in 1996 and assuming
that the values of other variables
affecting the reserve ratio in the second
semiannual period will fall within their
historical ranges. While the lower
bound on the year-end BIF reserve ratio
is below the 1.25 percent target, this
presumes an unexpected increase in
insurance losses/provisions of $600
million. Such an increase is consistent
with the historical experience of the
FDIC, but it must be viewed as a remote
possibility in light of the current
economic environment and the near-
term outlook.
The stronger possibility is that
insured-deposit growth rates could
exceed forecasts based upon historical
experience. While the 6 percent upper
bound for deposit growth included in
Table 1 is high relative to the experience
of the 1990s, the FDIC cannot rule out
such a rate of growth in response to the
dramatic reductions in BIF assessment
rates that were effected in the second
half of 1995.
Moreover, given the prospect of a
continuing, large premium differential
between the insurance funds, there is a
realistic possibility of substantial
deposit migration from the SAIF to the
BIF. Though the law imposes
constraints on at least some forms of
deposit-shifting from one fund to
another, such constraints may be
countered by adaptations in the
marketplace. The relatively low rate of
migration to date is not likely to be
indicative of the rate to be expected
going forward, given that many market
participants may have delayed any
plans to migrate deposits in anticipation
of a legislative solution. In the absence
of a legislative solution to date, the FDIC
believes that there is a realistic
possibility of a significant increase in
deposit migration. However, the precise
timing and ultimate magnitude of any
increase is uncertain.
For illustration, Table 2 examines the
impact on the year-end BIF reserve ratio
of alternative deposit migration rates
during the second semiannual period of
1996. Columns 2 through 4 of the table
indicate the impact of deposit migration
rates under three different assumptions
concerning ‘‘normal’’ growth of BIF-
insured deposits (growth that is not due
to migration) for 1996. For example, the
ratios in the third column are derived
under the assumption that normal
deposit growth is 2 percent for 1996
(full year); assuming also that no deposit
migration occurs during the year, the