FDIC Asks Banks for $45Bn of Prepaid Assessments
The Federal Deposit Insurance Corp.'s (FDIC) board of directors voted Thursday to require insured institutions to prepay quarterly insurance assessments for slightly more than three years. FDIC expects to collect around $45bn in prepaid assessments, which will strengthen the cash position of the Deposit Insurance Fund at a time when weekly bank failures take substantial hits on the fund. Institutions must prepay their estimated risk-based assessments for Q409 through Q412 along with the assessment for Q309, FDIC said in a financial institution letter. This prepayment, due December 30, will not immediately affect bank earnings, FDIC said, as the industry's liquid reserve balances totaled more than $1.3trn as of June 30. "I am pleased, but not surprised, by the industry's willingness to step up to the task of rebuilding and strengthening the cash reserves of the fund," said FDIC chairman Sheila Bair. "In September, I expressed confidence that the industry was up to this challenge and the industry has not disappointed." The FDIC first proposed the rule in late September to require the prepayments. Since that time, the FDIC received various comments on the proposal. Bair added: "The comment letters we received over this past month made clear that the FDIC and the industry are of the same mind: we will do whatever it takes to maintain the public's confidence in insured institutions and we remain committed to maintaining the independence of the Deposit Insurance Fund through direct industry funding." Write to Diana Golobay.