All Things FinReg


The Federal Deposit Insurance Corporation (FDIC) approved a final rule yesterday to increase the Deposit Insurance Fund (DIF) to the statutorily required minimum level of 1.35%.

The FDIC’s final rule, which was proposed in November 2015, implements the provisions of the Dodd-Frank Act (section 334) that increases the DIF minimum reserve ratio from 1.15% to 1.35% and requires that the ratio reach that level by September 30, 2020. The Dodd-Frank Act also made banks with $10 billion or more in total assets responsible for the statutory DIF reserve increase.

Under the FDIC’s final rule, banks with total assets of $10 billion or more will fund the DIF increase by paying an assessment surcharge of 4.5 cents per $100 of their assessment base, subject to certain adjustments. By the same token, banks with less than $10 billion in total assets will have substantially lower assessment rates, which is consistent with existing deposit insurance assessment requirements previously adopted in 2011. The FDIC has stated that it expects the DIF reserve ratio will likely reach 1.35% after approximately two years of the surcharge payments.

The final rule will take effect on July 1, 2016. If the reserve ratio reaches 1.15% before that date, surcharges will begin July 1, whereas if the reserve ratio has not reached 1.15% by that date, surcharges will begin the first quarter after the reserve ratio reaches 1.15%. The surcharge will continue until the DIF reserve ratio reaches or exceeds 1.35%, but in any event, no later than the fourth quarter of 2018.