The Federal Deposit Insurance Corp. is abandoning its current assessment system of charging premiums based on an insured-institution's deposits, moving toward a system based on asset size.
"It is a sea-change that breaks the links between deposit insurance and deposits for the first time," said acting Comptroller of the Currency John Walsh.
FDIC chairman Sheila Bair noted that the proposed changes are mandated by the Dodd-Frank Act. "Going to assets is better reflective of the risks to the deposit insurance fund," she said at Tuesday morning's FDIC board meeting. The five members of the FDIC board voted in favor of issuing the 'Notice of Proposed Rulemaking' for public comment.
The new assessment base is designed to be revenue neutral but it "shifts the overall burden to the largest institutions particularly those over $100 billion," said FDIC vice chairman Martin Gruenberg. Banks and thrifts with less than $10 billion in assets will see a reduction in FDIC assessments.
The FDIC board also agreed to issue a new proposal that would create risk-based assessments for large banks and for highly "complex" banks.
This proposal relies on score cards to measure risks that institutions take on during the business cycle. It sets higher assessments as the risks and loss severities rise.
The regulators hope this approach will provide incentives for banks to avoid taking on excessive risks.
