Special Assessments Pursuant to Systemic Risk Determination
Notice of proposed rulemaking.
CFR Part: "12 CFR Part 327"
RIN Number: "RIN 3064-AF93"
Citation: "88 FR 32694"
Page Number: "32694"
"Proposed Rules"
Agency: "
SUMMARY: The
DATES:
Comments must be received on or before
ADDRESSES: Interested parties are invited to submit written comments, identified by RIN 3064-AF93, by any of the following methods:
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FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Background On
FOOTNOTE 1 FDIC PR-16-2023. "FDIC Creates a
FOOTNOTE 2 FDIC PR-18-2023. "
Section 13(c)(4)(G) of the FDI Act permits the
FOOTNOTE 3 12 U.S.C. 1823(c)(4)(G). As used in this proposed rule, the term "bank" is synonymous with the term "insured depository institution" as it is used in section 3(c)(2) of the FDI Act, 12 U.S.C. 1813(c)(2). END FOOTNOTE
On
FOOTNOTE 4 12 U.S.C. 1823(c)(4)(G). See also: FDIC PR-17-2023. "Joint Statement by the
On
FOOTNOTE 5 A bridge bank is a chartered national bank that operates under a board appointed by the
On
FOOTNOTE 6 FDIC PR-21-2023. "
FOOTNOTE 7 FDIC PR-23-2023. "
II. Legal Authority and Policy Objectives
Under section 13(c)(4)(G) of the FDI Act, the loss to the DIF arising from the use of a systemic risk exception must be recovered from one or more special assessments on IDIs, depository institution holding companies (with the concurrence of the Secretary of the
FOOTNOTE 8 12 U.S.C. 1823(c)(4)(G)(ii)(I). END FOOTNOTE
FOOTNOTE 9 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
Section 13(c)(4)(G) of the FDI Act provides the
FOOTNOTE 10 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
III. Description of the Proposed Rule
A. Summary
The
The
The assessment base for the special assessments would be adjusted to exclude the first
FOOTNOTE 11 As used in this proposal, the term "banking organization" includes IDIs that are not subsidiaries of a holding company as well as holding companies with one or more subsidiary IDIs. END FOOTNOTE
If an IDI is part of a holding company with one or more subsidiary IDIs, the
FOOTNOTE 12 As used in this proposal, the term "affiliate" has the same meaning as defined in section 3 of the FDIC Act, 12 U.S.C. 1813(w)(6), which references the Bank Holding Company Act ("any company that controls, is controlled by, or is under common control with another company"). See 12 U.S.C. 1841(k). END FOOTNOTE
FOOTNOTE 13 IDIs with less than
The estimated loss attributable to the protection of uninsured depositors pursuant to the systemic risk determination is currently estimated to total
If, prior to the end of the eight-quarter collection period, the
Receiverships are terminated once the
B. Estimated Special Assessment Amount
By statute, the
FOOTNOTE 14 12 U.S.C. 1823(c)(4)(G)(ii). END FOOTNOTE
At
In total, of the
Under the proposal, the
FOOTNOTE 15 Estimates of the special assessment rate and expected effects in this proposed rule generally reflect any amendments to data reported through
D. Assessment Base for the Special Assessments
Under the proposal, each IDI's assessment base for the special assessments would be equal to estimated uninsured deposits as reported in the Call Report or
FOOTNOTE 16 Estimated uninsured deposits are reported in Memoranda Item 2 on Schedule RC-O, Other Data for Deposit Insurance Assessments of both the Call Report and
Defining the assessment base for the special assessment as estimated uninsured deposits reported as of
In general, large banks and regional banks, and particularly those with large amounts of uninsured deposits, were the banks most exposed to and likely would have been the most affected by uninsured deposit runs. Indeed, shortly after
With the rapid collapse of
On average, the largest banking organizations by asset size fund a larger share of assets with uninsured deposits, as depicted in Table 1 below, based on data as of
Table 1-Average Share of Assets Funded by Uninsured Deposits, by Banking Organization Asset Size
Asset size of banking organization Average share of
assets funded by
uninsured deposits
(percent)
$ 1 to $ 5 Billion 28.1
$ 5 to $ 10 Billion 28.9
$ 10 to $ 50 Billion 32.1
$ 50 to $ 250 Billion 34.2
Greater than $ 250 Billion 35.8
Deposits are the most common funding source for many institutions; however, other liability sources such as borrowings can also provide funding. Deposits and other liability sources are often differentiated by their stability and customer profile characteristics. While some uninsured deposit relationships remain stable when a bank is in good condition, such relationships might become less stable due to their uninsured status if a bank experiences financial problems or if the banking industry experiences stress events.
Uninsured deposit concentrations of IDIs, meaning the percentage of domestic deposits that are uninsured, also vary significantly. At
Table 2-Uninsured Deposits as a Percentage of Total Domestic Deposits, by Banking Organization Asset Size
Asset size of banking organization Ratio of uninsured
deposits to total
domestic deposits
(percent)
$ 1 to $ 5 Billion 33.2
$ 5 to $ 10 Billion 35.0
$ 10 to $ 50 Billion 39.9
$ 50 to $ 250 Billion 44.2
Greater than $ 250 Billion 51.8
Based on
FOOTNOTE 17
Following the announcement of the systemic risk determination, the
Under the proposal, the banks that benefited most from the assistance provided under the systemic risk determination would be charged special assessments to recover losses to the DIF resulting from the protection of uninsured depositors, with banks of larger asset sizes and that hold greater amounts of uninsured deposits paying higher special assessments.
For banking organizations that have more than one subsidiary IDI, the assessment base for the special assessments would be equal to its total estimated uninsured deposits reported as of
FOOTNOTE 18 As used in this
FOOTNOTE 19 IDIs with less than
Table 3-Calculation of Special Assessments within a Banking Organization With More Than One Insured Depository Institution Subsidiary
Column A Column B Column C Column D Column E
Estimated IDI share of IDI share of Assessment base IDI Share of
uninsured banking $ 5 billion deduction for special special
deposits as organization (Column B * $ 5 billion ) assessment assessments
reported as of estimated (Column A - Column C) (Column D * 25 basis
December 31, 2022 uninsured points)/current
deposits loss estimate
(percent) (percent)
IDI A $ 50,000 50 $ 2,500 $ 47,500 0.75
IDI B 40,000 40 2,000 38,000 0.60
IDI C 10,000 10 500 9,500 0.15
The adjustments to the assessment base for the special assessments would serve several purposes. First, IDIs without affiliates and banking organizations, that reported
Second, the proposed methodology also would result in most small IDIs and IDIs that are part of a small banking organization not paying anything towards the special assessments. As proposed, the
Based on data reported as of
Table 4-Banking Organizations Required To Pay Special Assessments, Based on Data Reported as ofDecember 31, 2022 Asset size of banking organization Number of Percentage Share of Share of banking of banking special industry organizations organizations assessments assets required to required to (percent) (percent) pay special pay special assessments assessments (percent) Greater than$ 50 billion 48 1.1 95.2 76.0 Between$ 5 and$ 50 billion 65 1.5 4.8 7.0 Under$ 5 billion 0 0.0 0.0 0.0 Total 113 2.6 100.0 83.0
Finally, deducting
The proposed methodology ensures that the banks that benefited most from the assistance provided under the systemic risk determination would be charged special assessments to recover losses to the DIF resulting from the protection of uninsured depositors, with banks of larger asset sizes and that hold greater amounts of uninsured deposits paying higher special assessments.
E. Collection Period for Special Assessments
Under the proposal, the special assessments would be collected beginning with the first quarterly assessment period of 2024 (i.e.,
The estimated loss attributable to the protection of uninsured depositors pursuant to the systemic risk determination is currently estimated to total
The
The
FOOTNOTE 20 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
F. Extended Special Assessment Period
If, at the end of the eight-quarter collection period, the estimated or actual loss exceeds the amount collected, the
In the event that extended special assessments are needed, the
The assessment base for such extended special assessment would be as described above, based on estimated uninsured deposits reported as of
G. One-Time Final Shortfall Special Assessment
The
FOOTNOTE 21 12 U.S.C. 1823(c)(4)(G)(ii). END FOOTNOTE
In the likely event that a final loss amount at the termination of the receiverships is not determined until after the initial special assessments and any extended special assessments have been collected, and if losses at the termination of the receiverships exceed the amount collected through such special assessments (the final shortfall amount), the
The assessment base for such one-time final shortfall special assessment would be as described above, based on estimated uninsured deposits reported as of
The entire final shortfall amount would be collected in one quarter so that there are no missed amounts due to mergers or other arrangements, and to streamline the operational impact on banking organizations. The
The
H. No Prior Period Amendments
Each IDI's assessment base for the special assessments would be based on its estimated uninsured deposits reported on its Call Report for
I. Collection of Special Assessments and Any Shortfall Special Assessment
The special assessments and any shortfall special assessment would be collected at the same time and in the same manner as an IDI's regular quarterly deposit insurance assessment. Invoices for an IDI's regular quarterly deposit insurance assessment would disclose the amount of any special assessments or shortfall special assessments due.
J. Payment Mechanism for the Special Assessments and Shortfall Special Assessment
Each IDI would be required to take any actions necessary to allow the
FOOTNOTE 22 See 12 CFR 327.3(c). END FOOTNOTE
K. Mergers, Consolidations and Terminations of
First, under existing regulations, an IDI that is not the resulting or surviving IDI in a merger or consolidation must file a quarterly Call Report for every assessment period prior to the assessment period in which the merger or consolidation occurs. The surviving or resulting IDI is responsible for ensuring that these Call Reports are filed. The surviving or resulting IDI is also responsible and liable for any unpaid assessments on the part of the IDI that is not the resulting or surviving IDI. /23/ The
FOOTNOTE 23 12 CFR 327.6(a). END FOOTNOTE
Second, if an IDI acquires--through merger or consolidation--another IDI during the collection period of the special assessments, the acquiring IDI would be required to pay the acquired IDI's special assessments, if any, in addition to its own special assessments from the quarter of the acquisition through the remainder of the collection period. The
Third, existing regulations provide that, when the insured status of an IDI is terminated and the deposit liabilities of the IDI are not assumed by another IDI, the IDI whose insured status is terminating must, among other things, continue to pay assessments for the assessment periods that its deposits are insured, but not thereafter. /24/ The
FOOTNOTE 24 12 CFR 327.6(c). END FOOTNOTE
Finally, in the case of one or more transactions in which one IDI voluntarily terminates its deposit insurance under the FDI Act and sells certain assets and liabilities to one or more other IDIs, each IDI must report the increase or decrease in assets and liabilities on the Call Report due after the transaction date and be assessed accordingly under existing
FOOTNOTE 25 12 CFR 327.6(c). END FOOTNOTE
L. Accounting Treatment
Each institution should account for the special assessment in accordance with
FOOTNOTE 26 FASB ASC paragraph 450-20-25-2. END FOOTNOTE
Similarly, each institution should account for any shortfall special assessment in accordance with FASB ASC Topic 450 when the conditions for accrual under GAAP have been met.
M. Request for Revisions
An IDI may submit a written request for revision of the computation of any special assessment or shortfall special assessment pursuant to existing regulation 12 U.S.C. 327.3(f). /27/
FOOTNOTE 27 Consistent with Section M above, amendments filed by an IDI to its Call Report or
IV. Analysis and Expected Effects
A. Analysis of the Statutory Factors
Section 13(c)(4)(G) of the FDI Act provides the
FOOTNOTE 28 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
The Types of Entities That Benefit
In implementing special assessments under section 13(c)(4)(G) of the FDI Act, the
FOOTNOTE 29 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
With the rapid collapse of
FOOTNOTE 30 12 U.S.C. 1823(c)(4)(G). See also: FDIC PR-17-2023. "Joint Statement by the
In the weeks that followed the determination of systemic risk, efforts to stabilize the banking system and stem potential contagion from the failures of
In general, large banks and regional banks, and particularly those with large amounts of uninsured deposits, were the banks most exposed to and likely would have been the most affected by uninsured deposit runs. Indeed, shortly after
Effects on the Industry
In calculating the assessment base for the special assessments, the
Based on data reported as of
FOOTNOTE 31 The number of banking organizations subject to special assessments may change prior to any final rule depending on any adjustments to the loss estimate, mergers or failures, or similar activities, or amendments to reported estimates of uninsured deposits. END FOOTNOTE
Capital and Earnings Analysis
The
FOOTNOTE 32 All income statement items used in this analysis were adjusted for the effect of mergers. Institutions for which four quarters of non-zero earnings data were unavailable, including insured branches of foreign banks, were excluded from this analysis. END FOOTNOTE
To avoid the possibility of underestimating effects on bank earnings or capital, the analysis also assumes that the effects of the special assessments are not transferred to customers in the form of changes in borrowing rates, deposit rates, or service fees. Because special assessments are a tax-deductible operating expense for all institutions, increases in the assessment expense can lower taxable income. /33/ The analysis considers the effective pre-tax cost of special assessments in calculating the effect on capital. /34/
FOOTNOTE 33 The Tax Cuts and Jobs Act of 2017 placed a limitation on tax deductions for
FOOTNOTE 34 The analysis does not incorporate any tax effects from an operating loss carry forward or carry back. END FOOTNOTE
A banking organization's earnings retention and dividend policies influence the extent to which special assessments affect equity levels. If a banking organization maintains the same dollar amount of dividends when it recognizes the accrual of a liability and an estimated loss (i.e., expense) from a loss contingency for the special assessments or shortfall special assessment as proposed, equity (retained earnings) will be reduced by the full amount of the pre-tax cost of the special assessments or shortfall special assessment. This analysis instead assumes that a banking organization will maintain its dividend rate (that is, dividends as a percentage of net income) unchanged from the weighted average rate reported over the four quarters ending
FOOTNOTE 35 The analysis uses four percent as the threshold because IDIs generally need to maintain a Tier 1 leverage ratio of 4.0 percent or greater to be considered "adequately capitalized" under Prompt Corrective Action Standards, in addition to the following requirements: (i) total risk-based capital ratio of 8.0 percent or greater; (ii) Tier 1 risk-based capital ratio of 6.0 percent or greater; (iii) common equity tier 1 capital ratio of 4.5 percent or greater; and (iv) does not meet the definition of "well capitalized." Beginning
As proposed, the
Given this estimate and the assumptions in the analysis, the
FOOTNOTE 36 Estimated effects on capital are calculated based on data reported as of
The banking industry reported full-year 2022 net income lower than full-year 2021 net income, but still above the pre-pandemic average. The effect of the proposed special assessments on a banking organization's income is measured by calculating the amount of the special assessments as a percent of pre-tax income (hereafter referred to as "income"). This income measure is used in order to eliminate the potentially transitory effects of taxes on profitability.
While special assessments are allocated based on estimated uninsured deposits reported at the banking organization level, IDIs will be responsible for payment of the special assessments. The
FOOTNOTE 37 There were no banking organizations that would be required to pay special assessments that were unprofitable based on average quarterly income from
The effects on income of the entire amount of special assessments to be collected over eight quarters are assumed to occur in one quarter only. Given the assumptions and the estimated loss amount, the
FOOTNOTE 38 Earnings or income are quarterly income before assessments and taxes. Quarterly income is assumed to equal average income from
Table 5 shows that approximately 66 percent of profitable banking organizations subject to the proposal are projected to have special assessments of less than 20 percent of income, including 23 percent with special assessments of less than 5 percent of income. Another 34 percent of profitable banking organizations subject to the proposal are projected to have special assessments equal to or exceeding 20 percent of income.
Table 5-Estimated One-Quarter Effect of Entire Amount of Special Assessments on Income for Profitable Banking Organizations Subject to Special Assessments fn1
Special assessments as percent of Number of Percent of Assets of Percent of
income banking banking banking assets
organizations organizations organizations
( $ billions)
Over 30% 13 12 4,455 23
20% to 30% 25 22 10,713 56
10% to 20% 34 30 2,577 13
5% to 10% 14 13 307 2
Less than 5% 26 23 1,117 6
Total 112 100 19,170 100
fn1 Income is defined as quarterly pre-tax income. Quarterly income is assumed to equal the average of income from January 1, 2022 , through December 31, 2022 . For purposes of this analysis, the effects on income of the entire amount of special assessments to be collected over eight quarters are assumed to occur in one quarter only. Special assessments as a percent of income is an estimate of the one-time accrual of a full eight quarters of special assessments as a percent of a single quarter's income. Profitable banking organizations are defined as those having positive average income for the 12 months ending December 31, 2022 . Excludes two insured U.S. branches of one foreign banking organization subject to special assessments. Some columns do not add to total due to rounding.
In order to preserve liquidity at IDIs, and in the interest of consistent and predictable assessments, the special assessments would be collected over eight quarters. The proposed special assessments would be applicable no earlier than the first quarterly assessment period of 2024, providing time for institutions to prepare and plan for the special assessments.
Economic Conditions
On
FOOTNOTE 39 FDIC Quarterly Banking Profile, Fourth Quarter 2022. https://www.fdic.gov/analysis/quarterly-banking-profile/qbp/2022dec/. END FOOTNOTE
Loan growth continued, net interest income grew, and asset quality measures remained favorable. Further, the industry remained well capitalized and highly liquid, but the report also highlighted a key weakness in elevated levels of unrealized losses on investment securities due to rapid increases in market interest rates. Unrealized losses on available-for-sale and held-to-maturity securities totaled
The financial system continues to face significant downside risks from the effects of inflation, rising market interest rates, and a weak economic outlook. Credit quality and profitability may weaken due to these risks, potentially resulting in tighter loan underwriting, slower loan growth, higher provision expenses, and liquidity constraints. Additional short-term interest rate increases, combined with longer asset maturities may continue to increase unrealized losses on securities and affect bank balance sheets in coming quarters.
Despite these downside risks, in the weeks that followed the failure of
FOOTNOTE 40 Statement of
B. Alternatives Considered
While the
FOOTNOTE 41 12 U.S.C. 1823(c)(4)(G)(ii)(I). In implementing special assessments, the
Alternative 1: One-Time Special Assessment
As an alternative to the proposal, the
Once actual losses are determined as of the termination of the receiverships, and if the actual losses exceeded the amount collected under the one-time special assessment, the
Conversely, if the amount collected under the one-time special assessment exceeded actual losses, the
FOOTNOTE 42 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
While under both the proposal and this alternative, the estimated amount of the special assessment would be recognized with the accrual of a liability and an estimated loss (i.e., expense) from a loss contingency when the institution determines that the conditions for accrual under GAAP have been met, which impacts capital and earnings, this alternative would additionally require payment of the entire amount in the second quarter of 2024, and would impact liquidity significantly in one quarter. The
Alternative 2: Asset Size Applicability Threshold
As an alternative to deducting the first
As described previously, in implementing special assessments, the FDI Act requires the
FOOTNOTE 43 12 U.S.C. 1823(c)(4)(G)(ii)(III). END FOOTNOTE
While both the proposal, including the
Alternative 3: Assessment Base Equal to All Uninsured Deposits, Without
A third alternative would be to eliminate the proposed
FOOTNOTE 44 IDIs with less than
However, given the
Alternative 4: Special Assessments Based on
A fourth alternative would be to allocate the special assessments among IDIs based on each IDI's estimated uninsured deposits as a percentage of their total domestic deposits reported as of
FOOTNOTE 45 IDIs with less than
Under this alternative, IDIs with a greater reliance on uninsured deposits would generally pay the greatest amount of special assessments; however, the special assessments would be allocated across a large number of institutions. This alternative would result in institutions of vastly different asset sizes paying a similar dollar amount of special assessments. It also would result in some smaller IDIs and banking organizations, paying potentially significant amounts of special assessments, and the larger banks that have high amounts of uninsured deposits and benefited the most from the stability provided to the banking industry under the systemic risk determination, but that do not have high uninsured deposit concentrations, paying a smaller share of special assessments.
In general, large banks and regional banks, and particularly those with large amounts of uninsured deposits, were the banks most exposed to and likely would have been the most affected by uninsured deposit runs. Generally speaking, larger banks benefited the most from the stability provided to the banking industry under the systemic risk determination. The
Alternative 5: Charge IDIs for 50 Percent of Special Assessment in Year One Based on Uninsured Deposits as of
Under the proposal and all alternatives described, the special assessments would initially be calculated based on an estimated amount of losses, as the exact amount of losses will not be known until the
Under this alternative, for the initial four-quarter collection period the special assessment would be allocated to all IDIs based on each IDI or banking organization's estimated uninsured deposits as a share of estimated uninsured deposits reported by all IDIs as of
The remaining special assessments would be based on an updated estimate of losses as of
The
Alternative 6: Apply Special Assessment Rate to Regular Assessment Base, With or Without Application of a
A sixth alternative would be to apply a special assessment rate to an institution's regular quarterly deposit insurance assessment base (regular assessment base) for that quarter, with or without applying a
FOOTNOTE 46 See 12 CFR 327.5. END FOOTNOTE
Under this alternative, the IDIs with the largest assessment base would pay the greatest amount of special assessments. IDIs for which certain assets are excluded in the calculation of the regular assessment base would pay lower special assessments due to their smaller assessment base.
This alternative would result in smaller IDIs and banking organizations, regardless of reliance on uninsured deposits for funding, paying potentially significant amounts of special assessments. Further, IDIs engaged in trust activities, or with fiduciary and custody and safekeeping assets, and for which certain assets are excluded from their regular assessment base, would pay lower amounts of special assessments due to these exclusions, despite holding significant amounts of uninsured deposits. The
The
In the
C. Comment Period, Effective Date, and Application Date
The
V. Request for Comment
The
Question 1: Should the special assessments be calculated as proposed?
Question 2: Are there alternative methodologies for calculating the special assessments the
Question 3: Should the assessment base for the special assessments be equal to estimated uninsured deposits reported as of
Question 4: Should the assessment base for the special assessments be equal to estimated uninsured deposits or some other measure?
Question 5: Is the deduction of
Question 6: Should the
Question 7: Should the
Question 8: Should any shortfall special assessments be calculated as proposed?
VI. Administrative Law Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a proposed rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. /47/ However, an initial regulatory flexibility analysis is not required if the agency certifies that the proposed rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.
FOOTNOTE 47 5 U.S.C.
FOOTNOTE 48 The SBA defines a small banking organization as having
FOOTNOTE 49 5 U.S.C. 601(2). END FOOTNOTE
The
FOOTNOTE 50
The
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 /51/ (PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid
FOOTNOTE 51 44 U.S.C. 3501-3521. END FOOTNOTE
C.
Section 302(a) of the
FOOTNOTE 52 12 U.S.C. 4802(a). END FOOTNOTE
FOOTNOTE 53 12 U.S.C. 4802(b). END FOOTNOTE
The proposed rule would not impose additional reporting, disclosure, or other new requirements on insured depository institutions, including small depository institutions, or on the customers of depository institutions. Accordingly, section 302 of RCDRIA does not apply. Nevertheless, the requirements of RCDRIA will be considered as part of the overall rulemaking process, and the
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act /54/ requires the Federal banking agencies to use plain language in all proposed and final rulemakings published in the
FOOTNOTE 54 Public Law 106-102, section 722, 113 Stat. 1338, 1471 (1999), 12 U.S.C. 4809. END FOOTNOTE
* Has the
* Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be stated more clearly?
* Does the proposed regulation contain language or jargon that is unclear? If so, which language requires clarification?
* Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand?
List of Subjects in 12 CFR Part 327 Bank deposit insurance, Banks, banking, Savings associations.
Authority and Issuance
For the reasons stated in the preamble, the
PART 327--ASSESSMENTS
1. The authority citation for part 327 is revised to read as follows:
Authority:12 U.S.C. 1813, 1815, 1817-19, 1821, 1823.
2. Add
(a) Special assessment. A special assessment shall be imposed on each insured depository institution to recover losses to the
(b) Losses to the
(c) Calculation of special assessment. An insured depository institution's special assessment for each quarter during the initial special assessment period and extended special assessment period shall be calculated by multiplying the special assessment rate defined in paragraph (f)(2) or (g)(3) of this section, as appropriate, by the institution's special assessment base as defined in paragraph (f)(3) or (g)(4) of this section, as appropriate.
(d) Invoicing of special assessment. For each assessment period in which the special assessment is imposed, the
(e) Payment of special assessment. Each insured depository institution shall pay to the Corporation any special assessment imposed under this section in compliance with and subject to the provisions of [Sec.]
(f) Special assessment during initial special assessment period--(1) Initial special assessment period. The initial special assessment period shall begin with the first quarterly assessment period of 2024 and end the last quarterly assessment period of 2025, except the initial special assessment period will cease the first quarterly assessment period after the aggregate amount of special assessments collected under this section meets or exceeds the losses to the
(2) Special assessment rate during initial special assessment period. The special assessment rate during the initial special assessment period is 3.13 basis points on a quarterly basis.
(3) Special assessment base during initial special assessment period. (i) The special assessment base for an insured depository institution during the initial special assessment period that has no affiliated insured depository institution shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section; minus
(B) The
(ii) The special assessment base for an insured depository institution during the initial special assessment period that has one or more affiliated insured depository institutions shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section; minus
(B) The institution's portion of the
(g) Special assessment during extended special assessment period--(1) Shortfall amount. The shortfall amount is the amount of losses to the
(2) Extended special assessment period. If there is a shortfall amount after the last quarterly assessment period of 2025, the special assessment period will be extended, with at least 30 day notice to insured depository institutions, to collect the shortfall amount. The length of the extended special assessment period shall be the minimum number of quarters required to recover the shortfall amount at a rate under paragraph (g)(3) of this section that is at or below 3.13 basis points per quarter.
(3) Assessment rate during extended special assessment period. The assessment rate during the extended special assessment period will be the shortfall amount, divided by the total amount of uninsured deposits for the quarter ended
(4) Assessment base during the extended special assessment period. (i) The special assessment base for an insured depository institution during the extended special assessment period that has no affiliated insured depository institution shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section, adjusted for mergers, consolidation, and termination of insurance as of the last assessment period of 2025; minus
(B) The
(ii) The special assessment base for an insured depository institution during the extended special assessment period that has one or more affiliated insured depository institutions shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section, adjusted for mergers, consolidation, and termination of insurance as of the last assessment period of 2025; minus
(B) The institution's portion of the
(h) Uninsured deposits. For purposes of this section, the term "uninsured deposits" means an institution's estimated uninsured deposits as reported in Memoranda Item 2 on Schedule RC-O, Other Data For Deposit Insurance Assessments in the Consolidated Reports of Condition and Income (Call Report) or Report of Assets and Liabilities of
(i) Special assessment base--institution's portion of the
(j) Affiliates. For the purposes of this section, an affiliated insured depository institution is an insured depository institution that meets the definition of "affiliate" in section 3 of the FDI Act, 12 U.S.C. 1813(w)(6).
(k) Effect of mergers, consolidations, and other terminations of insurance on special assessments--(1) Final quarterly certified invoice for acquired institution. The surviving or resulting insured depository institution in a merger or consolidation shall be liable for any unpaid special assessments or final shortfall special assessments outstanding at the time of the merger or consolidation on the part of the institution that is not the resulting or surviving institution consistent with
(2) Special assessment for quarter in which the merger or consolidation occurs. If an insured depository institution is the surviving or resulting institution in a merger or consolidation or acquires all or substantially all of the assets, or assumes all or substantially all of the deposit liabilities, of an insured depository institution, then the surviving or resulting insured depository institution or the insured depository institution that acquires such assets or assumes such deposit liabilities, shall be liable for the acquired institutions' special assessment, if any, from the quarter of the acquisition through the remainder of the initial or extended special assessment period, including any final shortfall special assessments.
(3) Other termination. When the insured status of an institution is terminated, and the deposit liabilities of such institution are not assumed by another insured depository institution, special assessments and any shortfall special assessments shall be paid consistent with
(l) One-time final shortfall special assessment. If the aggregate amount of special assessments collected during the initial or extended special assessment period(s) do not meet or exceed the losses to the
(1) Notification of final shortfall special assessment. The
(2) Aggregate final shortfall special assessment amount. The aggregate amount of the final shortfall special assessment imposed across all insured depository institutions shall equal the losses to the
(3) Final shortfall special assessment rate. The final shortfall special assessment rate shall be the aggregate final shortfall special assessment amount divided by the total amount of uninsured deposits for the quarter ended
(4) Final shortfall special assessment base. (i) The final shortfall special assessment base for an insured depository institution that has no affiliated insured depository institution shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section, adjusted for mergers, consolidation, and termination of insurance as of the assessment period preceding the final short fall assessment period; minus
(B) The
(ii) The final shortfall special assessment base for an insured depository institution that has one or more affiliated insured depository institutions shall equal:
(A) The institution's uninsured deposits, as described in paragraph (h) of this section, adjusted for mergers, consolidation, and termination of insurance as of the assessment period preceding the final shortfall assessment period; minus
(B) The institution's portion of the
(5) Calculation of final shortfall special assessment. An insured depository institution's final shortfall special assessment shall be calculated by multiplying the final shortfall special assessment rate by the institution's final shortfall special assessment base as defined in paragraph (l)(4) of this section.
(6) One-time final special assessment. The one-time final shortfall special assessment shall be collected on a one-time quarterly basis after final losses to the
(7) Payment, invoicing, and mergers. Paragraphs (d), (e), and (k) of this section are applicable to the one-time shortfall special assessment.
(m) Request for revisions. An insured depository institution may submit a written request for revision of the computation of any special assessment or shortfall special assessment pursuant to this part consistent with
(n) Special assessment collection in excess of losses. Any special assessments collected under this section that exceed the losses to the
(o) Rule of construction. Nothing in this section shall prevent the
By order of the Board of Directors.
Dated at
Assistant Executive Secretary.
[FR Doc. 2023-10447 Filed 5-19-23;
BILLING CODE 6714-01-P
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