ABA Asks FDIC to Reduce "Special Assessments" for the Deposit Insurance Fund

The American Bankers Association ("ABA") recommended "adjustments" to the FDIC's Interim Final Rule on special assessment collections; the rule created a mechanism to recover losses to the Deposit Insurance Fund ("DIF") from the 2023 collapse of Silicon Valley Bank.

The interim final rule reduces the special assessment rate for the eighth collection quarter from 3.36 basis points to 2.97 basis points and established a mechanism to offset regular quarterly deposit insurance assessments if aggregate collections exceed losses. In its letter, the ABA argued that further adjustments were "warranted to ensure alignment with declining and uncertain loss estimates," and to minimize the risk of overcollection.

The ABA emphasized that because the DIF remains well-capitalized and liquid, the agency should avoid imposing unnecessary liquidity burdens on the industry while litigation and receiverships remain active.

The ABA recommended that the FDIC:

• Defer or significantly reduce the assessment. The ABA recommended that the FDIC pause collection this quarter with a "true-up" to occur after the conclusion of the SVB litigation. Alternatively, the Association suggested collecting only half of the planned eighth-quarter assessment (approximately 1.68 basis points), noting that estimated losses have declined significantly to $16.7 billion.
• Account for litigation uncertainty. The letter argued that the current loss estimates include a $1.7 billion liability related to the SVB Financial Trust deposit claim which is still subject to litigation. The ABA contended that collecting the full assessment now risks overcollection, as a favorable resolution for the FDIC would further reduce actual losses.
• Rely on existing shortfall protections. The ABA noted that the rule already includes a mechanism "for a one-time shortfall assessment after receivership termination." The Association argued this existing safety net ensures statutory compliance without requiring immediate overpayment while loss estimates are trending downward.
• Pursue long-term structural improvements. The ABA encouraged the FDIC to continue analyzing a shift in the reserve ratio denominator from insured deposits to the assessment base, arguing that aligning the risk of the DIF to the risk-based pricing system would be a positive step forward.
• Optimize announcement timing. To ensure transparency and avoid market confusion, the ABA requested that the FDIC announce any changes to the eighth assessment in the first half of the first quarter, following the filing deadline for 10-Ks.