The U.S. government overrode industry objections and approved a plan to saddle the biggest banks with much of the tab for refilling the nation’s bedrock deposit-insurance fund.
The Federal Deposit Insurance Corp. green-lit the key parts of a proposal the regulator made in May to replenish the fund. It typically only covers as much as $250,000 in an account but was used to make whole uninsured depositors who were hit by banking turmoil this year.
U.S. officials’ extraordinary decision to cover all uninsured depositors at Signature Bank and Silicon Valley Bank in March immediately kicked off political jostling over who should pick up the tab. The FDIC now estimates the move cost the fund about $16.3 billion.
Industry calls to change aspects of the proposed methodology for calculating payments weren’t heeded in Thursday’s final plan.
Big banks will actually pay steeper fees, an annual rate of about 13.4 basis points rather than 12.5 basis points as proposed, which will be collected over eight periods. Lenders with less than $5 billion still won’t have to pay at all, the FDIC said.
Rob Nichols, head of the American Bankers Association, said his group was pleased that most community banks were spared. “We are disappointed, however, that the final cost of the assessment has increased, and we continue to have concerns with some aspects of the resolution process and the methodology underlying the special assessment,” he said in a statement.
The Deposit Insurance Fund under normal circumstances is refilled by all insured banks with quarterly fees known as assessments. The amount is also based on formulas.
The agency had scheduled a public meeting to vote Thursday on the plan, but canceled it last minute. Instead, the board members submitted written votes.
The abrupt cancellation coincided with calls from some Republican lawmakers for FDIC chairman Martin Gruenberg to step down. The pressure stemmed from a Wall Street Journal article on Monday that depicted a misogynistic culture among FDIC bank examiners that prompted women to quit.
Gruenberg told senators on Tuesday that the FDIC is investigating. But another story by the newspaper on Wednesday focused on allegations that Gruenberg’s responses to misconduct have been weak, and on complaints about his temper.
Sen. John Kennedy, R-La., said Thursday that Gruenberg should step aside “so that a new chair can restore the professional culture at the FDIC that the American people expect from its institutions.” Kennedy sent Gruenberg a letter demanding his resignation.
A spokeswoman for Gruenberg declined to comment on why the agency had canceled its Thursday meeting and on the calls for the chairman to resign.
A White House official said that the Biden administration supported the FDIC’s decision to investigate the reports, and called on the Senate to approve its nominee for FDIC inspector general.
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