by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the
Federal Deposit Insurance Corporation approved a final rule on
Assessments, Dividends, Assessment Base and Large Bank Pricing.
As required, the rule revises the base on which deposit insurance
assessments are charged from one based on domestic deposits to one based
A copy of the final rule is available at:
According to FDIC Chairman Sheila C. Bair, the new large bank pricing
system will result in higher assessment rates for banks with high-risk
asset concentrations, less stable balance sheet liquidity, or potentially
higher loss severity in the event of failure. Over the long term, Bair
said, large institutions that pose higher risk will pay higher assessments
when they assume these risks rather than when conditions deteriorate.
The final rule also retains the unsecured debt adjustment, which lowers an
institution's assessment rate to recognize the buffer that long-term
unsecured and subordinated debt provides the Deposit Insurance Fund. This
adjustment is recalibrated in the final rule to ensure that the incentive
for issuing this debt remains the same with the change to a larger
The final rule also revises the assessment rate schedule effective April
1, 2011, and adopts additional rate schedules that will go into effect
when the Deposit Insurance Fund (DIF) reserve ratio reaches various
milestones. These future rate schedules should accomplish the goals of
maintaining a positive fund balance, even during periods of large fund
losses, and maintaining steady, predictable assessment rates throughout
economic and credit cycles.
Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (866) 581-9302
Mobile: (312) 493-0874
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