FDIC to consider bank size in applying 'special assessment fee'

Reuters

Published Mar 29, 2023 05:05PM ET

(Reuters) - The U.S. Federal Deposit Insurance Corporation (FDIC) will take the plight of community banks into account when charging financial institutions a "special assessment fee" to cover recent losses incurred over the U.S. banking crisis, the FDIC's head told lawmakers in a hearing on Wednesday.

The special assessment fee, which is required by law, will help the FDIC cover losses to its deposit insurance fund from backstopping depositors at Silicon Valley Bank, which collapsed earlier this month. 

"The FDIC has authority to consider under the law who benefits from the assistance provided and we'll take that into account with particular attention and sensitivity to the impact on community banks," Martin Gruenberg, head of the FDIC, said in the hearing.

Some banking groups have urged the Biden administration and the FDIC to temporarily guarantee all U.S. bank deposits, a move they say will help quell a crisis of confidence after the failure of Silicon Valley Bank and Signature Bank (OTC:SBNY).

Representatives from both political parties in the U.S. pressed Michael Barr, Fed Vice Chair for Supervision, FDIC's Gruenberg and Treasury undersecretary for domestic finance Nellie Liang on why regulators did not act more forcefully, given Fed supervisors had been raising issues with the bank for months.