This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations Federal Register
67687
Vol. 61, No. 248
Tuesday, December 24, 1996
1 The DRR is a target ratio that has a fixed value
for each year. The value is either 1.25 percent or
such higher percentage as the Board determines to
be justified for that year by circumstances raising
a significant risk of substantial future losses to the
Fund. Id. 1817(b)(2)(A)(iv). The Board has not
altered the statutory DRR for either fund.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AB59
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is lowering the rates
on assessments paid to the Savings
Association Insurance Fund (SAIF), and
widening the spread of the rates, in
order to avoid collecting more than
needed to maintain the SAIF’s
capitalization at 1.25 percent of
aggregate insured deposits, and to
improve the effectiveness of the risk-
based assessment system.
The final rule establishes a base
assessment schedule for the SAIF with
rates ranging from 4 to 31 basis points,
and an adjusted assessment schedule
that reduces these rates by 4 basis
points. In general, effective SAIF rates
range from 0 to 27 basis points as of
October 1, 1996. The final rule also
prescribes a special interim schedule of
rates ranging from 18 to 27 basis points
for SAIF-member savings associations
for just the last quarter of 1996,
reflecting the fact that assessments paid
to the Financing Corporation (FICO) are
included in the SAIF rates for these
institutions during that interval. Excess
assessments collected under the prior
assessment schedule will be refunded or
credited, with interest.
The final rule establishes a procedure
for making limited adjustments to the
base assessment rates, both for the SAIF
and for the Bank Insurance Fund (BIF),
by rulemaking without notice and
comment.
The final rule clarifies and corrects
certain provisions without making
substantive changes.
EFFECTIVE DATE: December 11, 1996.
FOR FURTHER INFORMATION CONTACT:
Stephen Ledbetter, Chief, Assessments
Evaluation Section, Division of
Insurance (202) 898–8658; Allan Long,
Assistant Director, Division of Finance,
(202) 416–6991; James McFadyen,
Senior Financial Analyst, (202) 898–
7027; Christine Blair, Financial
Economist, (202) 898–3936, Division of
Research and Statistics; Richard
Osterman, Senior Counsel, (202) 898–
3523; Jules Bernard, Counsel, (202) 898–
3731, Legal Division, Federal Deposit
Insurance Corporation, Washington,
D.C. 20429.
SUPPLEMENTARY INFORMATION:
I. The Final Rule
A. Background
Under the prior assessment schedule,
SAIF rates have ranged from 23 basis
points for institutions in the best
assessment risk classification to 31 basis
points for institutions in the least
favorable one. This schedule has
implemented the risk-based assessment
program required by section 7 of the
Federal Deposit Insurance (FDI Act), 12
U.S.C. 1817. The schedule has been
designed to increase the reserve ratio of
the SAIF—the ratio of the SAIF’s net
worth to aggregate SAIF-insured
deposits, see id. 1817(l)(7)—to the
designated reserve ratio (DRR).1
The SAIF has never received the full
amount of the revenues that the SAIF
rates have generated, however. The
SAIF did not receive any revenues at all
from its creation in 1989 through the
end of 1992: all such revenues were
diverted to other needs. Revenues have
begun to flow into the SAIF after
January 1, 1993, but still not at the full
amounts. Certain SAIF-assessable
institutions—namely, SAIF-member
savings associations—have been
required to pay assessments to the FICO
in order to enable the FICO to pay the
interest on its bonds. The amounts that
these institutions have paid to the FICO
have served to reduce the amounts that
the institutions have paid to the SAIF.
At $793 million per year, the FICO draw
has been substantial. It has contributed
to the slow growth in the SAIF reserve
ratio, which has only increased from .28
percent to .47 percent during 1995.
Moreover, the assessment rates for the
BIF were much lower than the
comparable rates for the SAIF, because
the BIF’s reserve ratio had already
reached the DRR. The disparity created
incentives for institutions to move
deposits from SAIF-insured status to
BIF-insured status, and raised the
question of whether a shrinking SAIF-
assessable deposit base could continue
both to service the interest on FICO debt
and to capitalize the SAIF.
In response to these circumstances,
Congress adopted the Deposit Insurance
Funds Act of 1996 (Funds Act), Public
Law 104–208, sections 2701–2711, 110
Stat. 3009 et seq. (Sept. 30, 1996). The
Funds Act called for the FDIC to impose
a one-time special assessment on SAIF-
assessable deposits to raise the SAIF’s
reserve ratio to the DRR as of October
1, 1996. Id. section 2702. The FDIC
carried out this mandate. See 61 FR
53834 (Oct. 16, 1996). The Funds Act
also ended the link between the
amounts assessed by the FICO and the
amounts authorized to be assessed by
the SAIF, effective January 1, 1997.
B. Statutory Framework for Setting
Assessment Rates
Section 7(b)(1) of the FDI Act, 12
U.S.C. 1817(b)(1), requires the Board to
establish a risk-based assessment system
for all insured institutions. Id.
1817(b)(1)(A).
The Board must set semiannual
assessments for each institution based
on the following factors: (1) The
probability that the institution will
cause a loss to the BIF or to the SAIF,
(2) the likely amount of the loss, and (3)
the revenue needs of the appropriate
fund. Id. 1817(b)(1)(C).
Section 7(b)(2)(A) sets forth the
requirement that the FDIC’s assessments
must be designed to maintain each
fund’s reserve ratio at the DRR or, if the
fund’s reserve ratio is below that level,
to lift the ratio to the DRR. Section
7(b)(2)(A)(i) states this requirement as a
mandate to the Board to set assessments
that are sufficient to achieve the
appropriate goal. Id. 1817(b)(2)(A)(i).
Section 7(b)(2)(A)(iii), as amended by
section 2708(b) of the Funds Act, states
this requirement as a limitation on the
amounts to be collected: The Board may
not collect more for a fund than is
needed to fulfill the appropriate goal. Id.
1817(b)(2)(A)(iii).
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations Federal Register
67687
Vol. 61, No. 248
Tuesday, December 24, 1996
1 The DRR is a target ratio that has a fixed value
for each year. The value is either 1.25 percent or
such higher percentage as the Board determines to
be justified for that year by circumstances raising
a significant risk of substantial future losses to the
Fund. Id. 1817(b)(2)(A)(iv). The Board has not
altered the statutory DRR for either fund.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AB59
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is lowering the rates
on assessments paid to the Savings
Association Insurance Fund (SAIF), and
widening the spread of the rates, in
order to avoid collecting more than
needed to maintain the SAIF’s
capitalization at 1.25 percent of
aggregate insured deposits, and to
improve the effectiveness of the risk-
based assessment system.
The final rule establishes a base
assessment schedule for the SAIF with
rates ranging from 4 to 31 basis points,
and an adjusted assessment schedule
that reduces these rates by 4 basis
points. In general, effective SAIF rates
range from 0 to 27 basis points as of
October 1, 1996. The final rule also
prescribes a special interim schedule of
rates ranging from 18 to 27 basis points
for SAIF-member savings associations
for just the last quarter of 1996,
reflecting the fact that assessments paid
to the Financing Corporation (FICO) are
included in the SAIF rates for these
institutions during that interval. Excess
assessments collected under the prior
assessment schedule will be refunded or
credited, with interest.
The final rule establishes a procedure
for making limited adjustments to the
base assessment rates, both for the SAIF
and for the Bank Insurance Fund (BIF),
by rulemaking without notice and
comment.
The final rule clarifies and corrects
certain provisions without making
substantive changes.
EFFECTIVE DATE: December 11, 1996.
FOR FURTHER INFORMATION CONTACT:
Stephen Ledbetter, Chief, Assessments
Evaluation Section, Division of
Insurance (202) 898–8658; Allan Long,
Assistant Director, Division of Finance,
(202) 416–6991; James McFadyen,
Senior Financial Analyst, (202) 898–
7027; Christine Blair, Financial
Economist, (202) 898–3936, Division of
Research and Statistics; Richard
Osterman, Senior Counsel, (202) 898–
3523; Jules Bernard, Counsel, (202) 898–
3731, Legal Division, Federal Deposit
Insurance Corporation, Washington,
D.C. 20429.
SUPPLEMENTARY INFORMATION:
I. The Final Rule
A. Background
Under the prior assessment schedule,
SAIF rates have ranged from 23 basis
points for institutions in the best
assessment risk classification to 31 basis
points for institutions in the least
favorable one. This schedule has
implemented the risk-based assessment
program required by section 7 of the
Federal Deposit Insurance (FDI Act), 12
U.S.C. 1817. The schedule has been
designed to increase the reserve ratio of
the SAIF—the ratio of the SAIF’s net
worth to aggregate SAIF-insured
deposits, see id. 1817(l)(7)—to the
designated reserve ratio (DRR).1
The SAIF has never received the full
amount of the revenues that the SAIF
rates have generated, however. The
SAIF did not receive any revenues at all
from its creation in 1989 through the
end of 1992: all such revenues were
diverted to other needs. Revenues have
begun to flow into the SAIF after
January 1, 1993, but still not at the full
amounts. Certain SAIF-assessable
institutions—namely, SAIF-member
savings associations—have been
required to pay assessments to the FICO
in order to enable the FICO to pay the
interest on its bonds. The amounts that
these institutions have paid to the FICO
have served to reduce the amounts that
the institutions have paid to the SAIF.
At $793 million per year, the FICO draw
has been substantial. It has contributed
to the slow growth in the SAIF reserve
ratio, which has only increased from .28
percent to .47 percent during 1995.
Moreover, the assessment rates for the
BIF were much lower than the
comparable rates for the SAIF, because
the BIF’s reserve ratio had already
reached the DRR. The disparity created
incentives for institutions to move
deposits from SAIF-insured status to
BIF-insured status, and raised the
question of whether a shrinking SAIF-
assessable deposit base could continue
both to service the interest on FICO debt
and to capitalize the SAIF.
In response to these circumstances,
Congress adopted the Deposit Insurance
Funds Act of 1996 (Funds Act), Public
Law 104–208, sections 2701–2711, 110
Stat. 3009 et seq. (Sept. 30, 1996). The
Funds Act called for the FDIC to impose
a one-time special assessment on SAIF-
assessable deposits to raise the SAIF’s
reserve ratio to the DRR as of October
1, 1996. Id. section 2702. The FDIC
carried out this mandate. See 61 FR
53834 (Oct. 16, 1996). The Funds Act
also ended the link between the
amounts assessed by the FICO and the
amounts authorized to be assessed by
the SAIF, effective January 1, 1997.
B. Statutory Framework for Setting
Assessment Rates
Section 7(b)(1) of the FDI Act, 12
U.S.C. 1817(b)(1), requires the Board to
establish a risk-based assessment system
for all insured institutions. Id.
1817(b)(1)(A).
The Board must set semiannual
assessments for each institution based
on the following factors: (1) The
probability that the institution will
cause a loss to the BIF or to the SAIF,
(2) the likely amount of the loss, and (3)
the revenue needs of the appropriate
fund. Id. 1817(b)(1)(C).
Section 7(b)(2)(A) sets forth the
requirement that the FDIC’s assessments
must be designed to maintain each
fund’s reserve ratio at the DRR or, if the
fund’s reserve ratio is below that level,
to lift the ratio to the DRR. Section
7(b)(2)(A)(i) states this requirement as a
mandate to the Board to set assessments
that are sufficient to achieve the
appropriate goal. Id. 1817(b)(2)(A)(i).
Section 7(b)(2)(A)(iii), as amended by
section 2708(b) of the Funds Act, states
this requirement as a limitation on the
amounts to be collected: The Board may
not collect more for a fund than is
needed to fulfill the appropriate goal. Id.
1817(b)(2)(A)(iii).
67688 Federal Register / Vol. 61, No. 248 / Tuesday, December 24, 1996 / Rules and Regulations
2 Section 21(f)(2) of the Federal Home Loan Bank
Act, 12 U.S.C. 1441(f)(2), provides that amounts
assessed by the FICO reduce the amounts
authorized to be assessed by the FDIC for the SAIF.
Section 7(b)(2)(D) of the FDI Act, id. 1817(b)(2)(D),
states a parallel requirement. Section 2703 of the
Funds Act repeals both provisions. Section 2703(a)
repeals section 21(f)(2); section 2703(b) repeals
section 7(b)(2)(B).
The repeals are not simultaneous—at least, not on
their face. Section 2703(c)(1) sets an effective date
for section 2703(a) of January 1, 1997. Section
2703(c) does not mention section 2703(b).
Accordingly, section 2703(b) is—apparently—
effective upon passage of the Funds Act. If so,
section 7(b)(2)(D) has been repealed since
September 30, 1996. A repeal of section 7(b)(2)(D)
would have no practical consequence, as section
21(f)(2) remains in effect through the end of 1996.
The FDIC takes the view, however, that section
2703(c)(1) contains a drafting error in this regard.
Section 2703(c)(1) says it applies to section 2703(a)
and to section 2703(c)—that is, to itself. The FDIC
considers that the self-reference makes no sense,
and that a reference to subsection (b) was intended.
Accordingly, the FDIC interprets the Funds Act to
repeal section 7(b)(2)(D) on January 1, 1997, in
concert with the repeal of the Federal Home Loan
Bank Act’s parallel provisions.
Whether a fund is capitalized at the
DRR or otherwise, the Board may set
higher rates for institutions that exhibit
weakness or are not well capitalized. Id.
1817(b)(2)(A)(v).
In setting semiannual assessments for
an insurance fund, the Board must
consider the following factors: (1) The
fund’s expected operating expenses; (2)
the fund’s case resolution expenditures
and income; (3) the effect of assessments
on the earnings and capital of fund
members; and (4) any other factors that
the Board deems appropriate. Id.
1817(b)(2)(A)(ii).
Through the end of 1996, the FICO
draw serves to reduce the amounts that
the FDIC assesses against SAIF-member
savings associations. Id. 1441(f)(2) &
1817(b)(2)(D).2 Thereafter, the FICO
assessments are independent of and in
addition to those of the FDIC. Funds Act
section 2703 (a) and (c). But the FICO
still must assess institutions in the same
manner as the FDIC does, and the FDIC
still must approve the FICO’s
assessments. 12 U.S.C. 1441(f)(2).
Finally, through the end of 1998, the
assessment rate for a SAIF member may
not be less than the assessment rate for
a BIF member that poses a comparable
risk to the deposit insurance fund. Id.
1817(b)(2)(E).
C. The Base and Adjusted Assessment
Schedules for the SAIF
1. Overview
The SAIF’s reserve ratio has been well
below the DRR. The SAIF rates have
been designed to increase the SAIF’s
capitalization to the DRR. In accordance
with the Funds Act, however, the FDIC
has capitalized the SAIF at the DRR as
of October 1, 1996. The FDIC is
therefore lowering the SAIF rates as of
that date. See id. 1817(b)(2)(A)(iii) and
(v).
The FDIC is retaining the 9-cell
framework for SAIF assessment rates,
but is replacing the prior set of rates
with a new and lower rate-schedule,
entitled the SAIF Base Assessment
Schedule. The SAIF Base Assessment
Schedule sets forth a permanent set of
rates that will remain in place until
changed through notice-and-comment
rulemaking proceedings. The SAIF Base
Assessment Schedule is adopted as of
October 1, 1996. The SAIF Base
Assessment Schedule is as follows:
SAIF BASE ASSESSMENT SCHEDULE
Capital group Supervisory subgroup
A B C
1 .................. 4 7 21
2 .................. 7 14 28
3 .................. 14 28 31
The FDIC is also making an
immediate adjustment to the rates set
forth in the SAIF Base Assessment
Schedule. The adjustment, like the SAIF
Base Assessment Schedule, is adopted
as of October 1, 1996. The adjusted rates
are the ones that are effective.
The adjustment is two-fold:
—The FDIC is making a general
adjustment to the SAIF Base
Assessment Schedule that lowers the
rates therein by 4 basis points for all
institutions other than SAIF-member
savings associations. This adjustment
is temporary, but indefinite: the FDIC
expects to review it every semiannual
period, but will not necessarily
modify it, nor will the adjustment
automatically terminate on its own.
—The FDIC is making a special
adjustment to the SAIF Base
Assessment Schedule that replaces
the rates therein with a special
interim set of rates just for SAIF-
member savings associations, but only
for the fourth calendar quarter of
1996. Thereafter these institutions pay
the same SAIF rates as the others.
The SAIF Adjusted Assessment
Schedule sets forth both sets of adjusted
rates. The rates on the right in each risk
classification category apply to SAIF-
member savings associations during the
last calendar quarter of 1996. The rates
on the left in each risk classification
category apply to all other SAIF-
assessable institutions during that
quarter, and to all SAIF-assessable
institutions on and after January 1,
1997:
SAIF ADJUSTED ASSESSMENT
SCHEDULE
Supervisory subgroup
Capital group A B C
1 ..................... 0 18 3 21 17 24
2 ..................... 3 21 10 24 24 25
3 ..................... 10 24 24 25 27 27
The rates on the left in each risk
classification category—those that
represent the SAIF base rates as
modified by the 4-basis- point
adjustment—may be amended from time
to time within certain limits by
rulemaking without notice-and-
comment procedures.
The FDIC has published these rates as
a proposed rule, 61 FR 53867 (Oct. 16,
1996), and has received comments from
13 entities and organizations. Comments
have come from three holding-company
organizations (including their affiliates),
six savings banks, and four trade groups.
In addition, FDIC staff has conducted a
briefing for members of the Savings
Association Insurance Fund Industry
Advisory Committee.
2. The SAIF Base Assessment Schedule
a. The Rate-Spread. Risk-based
assessment rates have two purposes: To
reflect the risk posed to each insurance
fund by individual institutions, and to
provide institutions with proper
incentives to control risk-taking. The
FDIC believes that a 27-basis-point rate-
spread serves these purposes.
The FDIC has considered the
comparative merits of a rate-spread of 8
basis points. In December, 1992, when
the BIF and SAIF were both below the
DRR, and assessment revenues were
designed to build up the capitalization
of both funds, the FDIC proposed to
establish risk-based premium matrices
of 23 to 31 basis points for each fund.
The Board asked for comment on
whether the proposed assessment rate
spread of 8 basis points should be
widened. See 57 FR 62502 (Dec. 31,
1992). Ninety-six commenters addressed
this issue; 75 of them favored a wider
rate spread. In the final rule, the Board
expressed its conviction that widening
the rate spread was desirable in
principle, but chose to implement the 8-
basis point rate spread. The Board
expressed concern that widening the
spread while keeping assessment
revenue constant might unduly burden
the weaker institutions that would be
subject to greatly increased rates. See 58
FR 34357, 34361 (June 25, 1993).
Bankers, banking scholars and
regulators have all criticized the 8-basis
point rate-spread as being unduly
2 Section 21(f)(2) of the Federal Home Loan Bank
Act, 12 U.S.C. 1441(f)(2), provides that amounts
assessed by the FICO reduce the amounts
authorized to be assessed by the FDIC for the SAIF.
Section 7(b)(2)(D) of the FDI Act, id. 1817(b)(2)(D),
states a parallel requirement. Section 2703 of the
Funds Act repeals both provisions. Section 2703(a)
repeals section 21(f)(2); section 2703(b) repeals
section 7(b)(2)(B).
The repeals are not simultaneous—at least, not on
their face. Section 2703(c)(1) sets an effective date
for section 2703(a) of January 1, 1997. Section
2703(c) does not mention section 2703(b).
Accordingly, section 2703(b) is—apparently—
effective upon passage of the Funds Act. If so,
section 7(b)(2)(D) has been repealed since
September 30, 1996. A repeal of section 7(b)(2)(D)
would have no practical consequence, as section
21(f)(2) remains in effect through the end of 1996.
The FDIC takes the view, however, that section
2703(c)(1) contains a drafting error in this regard.
Section 2703(c)(1) says it applies to section 2703(a)
and to section 2703(c)—that is, to itself. The FDIC
considers that the self-reference makes no sense,
and that a reference to subsection (b) was intended.
Accordingly, the FDIC interprets the Funds Act to
repeal section 7(b)(2)(D) on January 1, 1997, in
concert with the repeal of the Federal Home Loan
Bank Act’s parallel provisions.
Whether a fund is capitalized at the
DRR or otherwise, the Board may set
higher rates for institutions that exhibit
weakness or are not well capitalized. Id.
1817(b)(2)(A)(v).
In setting semiannual assessments for
an insurance fund, the Board must
consider the following factors: (1) The
fund’s expected operating expenses; (2)
the fund’s case resolution expenditures
and income; (3) the effect of assessments
on the earnings and capital of fund
members; and (4) any other factors that
the Board deems appropriate. Id.
1817(b)(2)(A)(ii).
Through the end of 1996, the FICO
draw serves to reduce the amounts that
the FDIC assesses against SAIF-member
savings associations. Id. 1441(f)(2) &
1817(b)(2)(D).2 Thereafter, the FICO
assessments are independent of and in
addition to those of the FDIC. Funds Act
section 2703 (a) and (c). But the FICO
still must assess institutions in the same
manner as the FDIC does, and the FDIC
still must approve the FICO’s
assessments. 12 U.S.C. 1441(f)(2).
Finally, through the end of 1998, the
assessment rate for a SAIF member may
not be less than the assessment rate for
a BIF member that poses a comparable
risk to the deposit insurance fund. Id.
1817(b)(2)(E).
C. The Base and Adjusted Assessment
Schedules for the SAIF
1. Overview
The SAIF’s reserve ratio has been well
below the DRR. The SAIF rates have
been designed to increase the SAIF’s
capitalization to the DRR. In accordance
with the Funds Act, however, the FDIC
has capitalized the SAIF at the DRR as
of October 1, 1996. The FDIC is
therefore lowering the SAIF rates as of
that date. See id. 1817(b)(2)(A)(iii) and
(v).
The FDIC is retaining the 9-cell
framework for SAIF assessment rates,
but is replacing the prior set of rates
with a new and lower rate-schedule,
entitled the SAIF Base Assessment
Schedule. The SAIF Base Assessment
Schedule sets forth a permanent set of
rates that will remain in place until
changed through notice-and-comment
rulemaking proceedings. The SAIF Base
Assessment Schedule is adopted as of
October 1, 1996. The SAIF Base
Assessment Schedule is as follows:
SAIF BASE ASSESSMENT SCHEDULE
Capital group Supervisory subgroup
A B C
1 .................. 4 7 21
2 .................. 7 14 28
3 .................. 14 28 31
The FDIC is also making an
immediate adjustment to the rates set
forth in the SAIF Base Assessment
Schedule. The adjustment, like the SAIF
Base Assessment Schedule, is adopted
as of October 1, 1996. The adjusted rates
are the ones that are effective.
The adjustment is two-fold:
—The FDIC is making a general
adjustment to the SAIF Base
Assessment Schedule that lowers the
rates therein by 4 basis points for all
institutions other than SAIF-member
savings associations. This adjustment
is temporary, but indefinite: the FDIC
expects to review it every semiannual
period, but will not necessarily
modify it, nor will the adjustment
automatically terminate on its own.
—The FDIC is making a special
adjustment to the SAIF Base
Assessment Schedule that replaces
the rates therein with a special
interim set of rates just for SAIF-
member savings associations, but only
for the fourth calendar quarter of
1996. Thereafter these institutions pay
the same SAIF rates as the others.
The SAIF Adjusted Assessment
Schedule sets forth both sets of adjusted
rates. The rates on the right in each risk
classification category apply to SAIF-
member savings associations during the
last calendar quarter of 1996. The rates
on the left in each risk classification
category apply to all other SAIF-
assessable institutions during that
quarter, and to all SAIF-assessable
institutions on and after January 1,
1997:
SAIF ADJUSTED ASSESSMENT
SCHEDULE
Supervisory subgroup
Capital group A B C
1 ..................... 0 18 3 21 17 24
2 ..................... 3 21 10 24 24 25
3 ..................... 10 24 24 25 27 27
The rates on the left in each risk
classification category—those that
represent the SAIF base rates as
modified by the 4-basis- point
adjustment—may be amended from time
to time within certain limits by
rulemaking without notice-and-
comment procedures.
The FDIC has published these rates as
a proposed rule, 61 FR 53867 (Oct. 16,
1996), and has received comments from
13 entities and organizations. Comments
have come from three holding-company
organizations (including their affiliates),
six savings banks, and four trade groups.
In addition, FDIC staff has conducted a
briefing for members of the Savings
Association Insurance Fund Industry
Advisory Committee.
2. The SAIF Base Assessment Schedule
a. The Rate-Spread. Risk-based
assessment rates have two purposes: To
reflect the risk posed to each insurance
fund by individual institutions, and to
provide institutions with proper
incentives to control risk-taking. The
FDIC believes that a 27-basis-point rate-
spread serves these purposes.
The FDIC has considered the
comparative merits of a rate-spread of 8
basis points. In December, 1992, when
the BIF and SAIF were both below the
DRR, and assessment revenues were
designed to build up the capitalization
of both funds, the FDIC proposed to
establish risk-based premium matrices
of 23 to 31 basis points for each fund.
The Board asked for comment on
whether the proposed assessment rate
spread of 8 basis points should be
widened. See 57 FR 62502 (Dec. 31,
1992). Ninety-six commenters addressed
this issue; 75 of them favored a wider
rate spread. In the final rule, the Board
expressed its conviction that widening
the rate spread was desirable in
principle, but chose to implement the 8-
basis point rate spread. The Board
expressed concern that widening the
spread while keeping assessment
revenue constant might unduly burden
the weaker institutions that would be
subject to greatly increased rates. See 58
FR 34357, 34361 (June 25, 1993).
Bankers, banking scholars and
regulators have all criticized the 8-basis
point rate-spread as being unduly