FDIC Says Deposit Insurance Fund Maintains Sufficient Reserves

The FDIC recommended no changes to the "Amended Restoration Plan," a statutory requirement to ensure that the Deposit Insurance Fund ("DIF") reserve ratio does not fall below certain minimums. The FDIC reported that the reserve ratio is expected to meet its 1.35 percent minimum requirement ahead of a September 30, 2028 deadline.

In its semiannual update of the Deposit Insurance Fund, the FDIC explained that a restoration plan was originally implemented during the COVID-19 pandemic, after the DIF reserve ratio fell below the statutory minimum of 1.35 percent as a result of "extraordinary growth" in insured deposits. The FDIC Division of Insurance and Research explained that the Amended Restoration Plan was later implemented (see previous coverage) to (i) account for the increased assessment rates and (ii) increase the likelihood that the reserve ratio would meet the statutory minimum of 1.35 percent by the statutory deadline of September 30, 2028.

Under the Amended Restoration Plan, the FDIC is required to update its projections for the DIF balance and reserve ratio at least semiannually. However, the Division recommended no changes despite "increased uncertainty" within the banking industry and the recent failures of Signature Bank and Silicon Valley Bank. The Division said that the estimated loss from these two failures of $3.2 billion will directly impact the DIF balance. However, this estimated loss alone is not expected to have a "material effect" on the timeline to reach the statutory minimum reserve ratio.