FDIC says progress made on insurance fund, but higher assessments will remain

The Federal Deposit Insurance Corp. is making good progress restoring its Deposit Insurance Fund after several years of bank failures, but bankers shouldn’t expect the regulator to pull back anytime soon on the higher assessments it’s charging banks.

That’s what the FDIC’s board of directors heard Monday at its meeting at the FDIC’s headquarters in Washington, D.C.

According to a staff presentation and report to directors, the fund’s balance has increased for eight consecutive quarters and was at $11.8 billion at the end of 2011. But that represents a reserve ratio of 0.17 percent. The FDIC has a congressional mandate, via the Dodd-Frank Wall Street Reform and Consumer Protection Act, to reach a reserve ratio of 1.35 percent by Sept. 30, 2020.

FDIC staff told directors that their best estimate is that the plan to restore the fund in time to meet the Dodd-Frank requirements. But it may be the second half of 2018 before any easing of higher assessments on some banks occur.

Following the release of the update on the fund, the American Bankers Association issued a statement in which it said “the FDIC has been overly conservative in setting aside reserves for possible failures that did not occur.”