Plan for special assessments to cover losses of two failed banks expected next month, FDIC Board announces

Special assessments to recover the estimated $19.2 billion of losses due to uninsured depositors to the federal bank deposit insurance fund resulting from the failures of two banks in March will be proposed through rulemaking next month, the federal agency overseeing the fund said Tuesday.

The Federal Deposit Insurance Corp. (FDIC) Board, after meeting in open session, said in a release that it estimates the failures last month of Silicon Valley Bank of Santa Clara, Calif., and Signature Bank of New York, N.Y., resulted in total losses of approximately $22.5 billion. The agency board said $19.2 billion was attributable to the protection of uninsured depositors under the Systemic Risk Exception, a provision that allows the FDIC to cover the funds of all depositors in the interests of protecting the economy.

“Federal law requires that any losses to the FDIC’s Deposit Insurance Fund (DIF) related to this action be repaid by a special assessment on banks,” the board stated. “Only the remaining $3.3 billion in losses will directly impact the DIF balance and is not expected to have a material effect on the projected timeline for reaching the statutory minimum reserve ratio.”

Under the current plan (adopted in 2020), the FDIC is projected to reach its statutorily mandated reserve ratio of 1.35% for the BIF by September 2028. Last year, the board amended the plan to increase the initial base deposit insurance assessment rate schedules by two basis points beginning in the first quarterly assessment period of this year.

The agency board said Tuesday it is making no changes to the plan adopted to reach that reserve ratio (which is the amount of reserves in the fund relative to the total deposits insured).

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