The Federal Deposit Insurance Corp is expected to propose next month how to make the U.S. banking sector pay for an estimated $23 billion hole in its insurance fund by the collapse of Silicon Valley Bank and Signature Bank in March.
To stop the spread of panicked withdrawals throughout the banking system last month, the FDIC guaranteed all deposits at SVB and Signature Bank, even those over $250,000. Such losses require the FDIC to impose a "special assessment" to replenish the DIF.
The law does not define the "assessment base" for the special assessment or which banks will pay it. There is not a time frame for recouping the funds. Echoing of FDIC Chair Martin Gruenberg, former FDIC Chair Sheila Bair told Reuters on April 6 the agency has "a lot of latitude" in designing the special assessment.Currently, the law requires the FDIC to maintain $1.35 in the fund for every $100 of insured deposits. By the end of December, DIF's balance stood at $128.2 billion, meaning the bank failures in March could account for about 18% of the fund.
During the financial crisis of 2008 the sheer volume of bank failures pushed the DIF about $20 billion into the red. After a period of public comment, the FDIC's May 2009 on a special assessment put the cost burden more heavily on the shoulders of the biggest financial institutions.
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