Special Assessment Pursuant to Systemic Risk Determination

Following the consultation on proposed regulation aimed at recovering the losses incurred by the Deposit Insurance Fund (DIF) due to failures of the Silicon Valley Bank (SVB) in Santa Clara, CA, and Signature Bank (SB) in New York, NY, earlier this year, the Federal Deposit Insurance Company (FDIC) has now released its final regulation in this matter.
#### Background
To recall, in an effort to recover such funds, the FDIC proposed to impose „special assessments (levies)“ on insured depository institutions (IDIs) based on their uninsured deposit volume as of December 31, 2022 excluding the first $5 billion in estimated uninsured deposits. In case of an IDI being part of a holding company, the excluded amount would be based on an institution’s estimated uninsured deposits as a percentage of the total estimated uninsured deposits held by all IDIs of a holding company.
The „special assessments (levies)“ would be collected over a period of two years, in even quarterly payments, to recover a total of $15.8 billion – the then expected loss resulting from the failures of the SVB and the SB. Adjustments could be made by the FDIC (e.g. extension or reduction of payment periods or implementation of a final recovery charge), if the loss comes out to be different than the assumed loss in connection with the failures. Details on calculation and payment specifics, including the invoicing of the additional levies, and on notification requirements of the FDIC when making changes to the „special assessments“ were also included in the proposed rule.
#### Final Regulation
The FDIC notes that it will implement the final regulation just as proposed. However, based on the responses received, it has made some minor, non-material changes to the regulation to improve clarity and transparency. Furthermore, the FDIC has adjusted the amount of loss it seeks to recover to now state a total of $16.3 billion. As a consequence and due to the fact that the total assessment base (the amount of all uninsured deposits reported to the FDIC) has decreased, the annual rate to be collected has been adjusted upwards to 13.4 basis points.