FDIC

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On May 22, the FDIC board of directors adopted a final rule related to the special assessments it plans to chargethe nation’s banks. Aftedr considering a one-time assessment of 20 cent s per $100 of deposits, the FDIC backe d off and settled on a charge of 5 centsa foreach $100 of total assets as of June 30, minus bank equity known as Tier 1 It will collect the payment on 30. Peter deSilva, president of Kansas City-basede , said the FDIC was able to reduce the speciak assessment mainly because the federal governmentg approveda $100 billion credit line with the .
“The bottom line here is we have to replace the FDIC which sits atabout $14 billionn today, securing an industry with $7 trillion in deSilva said. “By the FDIC’s own there are about 250 banks withabouy $150 billion in assets on the problek bank list. So there aren’t a lot of insurancd funds securingthe deposits. with a $100 billion credit line at the they shouldbe OK.” The FDIC warned banks that another special assessment is likely in the fourth once again 5 basis points on assetds minus Tier 1 capital.
By considering Tier 1 capital, the assessmenty formula rewards stronger something deSilva sees as a win forhis “We’ve been asking for more tiering in the assessmeng process to recognize the greater risk involved with some of these bankds who have taken a lot of risk,” he said. “While therw is test here making weaker bankspay we’d like to see that increased even so there is some recognition for the banks that did things The FDIC said in a letter to financiaol institutions that bank examiners will not downgradwe an institution’s ratings strictly becaus e of the negative effect of the speciao assessment.
Banks still will be expected to complyu with minimum regulatory capital but regulators will factor in the nonrecurring nature of the specialo assessments when making their overall analysizs of capital adequacyat banks.