The Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking regarding a special assessment on large banks to recover approximately $15.8 billion in losses attributable to the failures of Silicon Valley Bank (SVB) and Signature Bank.
The notice, issued Thursday, seeks comments on the agency’s plan to recover the losses to the Deposit Insurance Fund (DIF) in the aftermath of the failures of SVB on March 10 and Signature Bank on March 12. The FDIC and the Treasury Department invoked a statutory systemic risk exception that allowed the FDIC to take over both banks and protect all uninsured deposits, which are funds in accounts with more than $250,000.
The $15.8 billion in losses were a result of that decision to protect uninsured depositors, the FDIC said in a press release.
“The full protection of all depositors, rather than imposing losses on uninsured depositors, was intended to strengthen public confidence in the nation’s banking system,” the notice said.
An estimated total of 113 banking organizations would be subject to the special assessment, the FDIC said in a fact sheet.
Banking organizations with total assets of more than $50 billion would pay more than 95 percent of the special assessment, the FDIC said, and no banking organizations with total assets under $5 billion would be subject to the special assessment.
The FDIC proposed to collect special assessment at an annual rate of approximately 12.5 basis points over eight quarterly assessment periods beginning with the first quarter of 2024. The special assessment rate is subject to change prior to any final rule, the agency said, “depending on any adjustments to the loss estimate, mergers or failures, or amendments to reported estimates of uninsured deposits.”
The special assessment does not account for the May 1 sale of First Republic Bank to JPMorgan Chase Bank, which carried an estimated hit of $13 billion to the DIF.
The FDIC and the Federal Reserve Board promised heightened supervision for regional and mid-sized banks following the collapses of SVB and Signature Bank. Such actions could include bringing back heightened supervisory requirements for banks with $100 billion or more in assets, including management of interest rate and liquidity risks, particularly as it pertains to uninsured deposits, standardizing liquidity requirements for a broader set of firms, increasing capital requirements, and more stress testing.
The proposed rule will be subject to public comment for 60 days following publication in the Federal Register.