WASHINGTON — The FDIC Board voted in favor of a one-time credit totaling $4.7 billion for qualifying banks and thrifts under the Federal Deposit Insurance Reform Act of 2005.
Banks and thrifts, or their successors, must have been in business prior to Dec. 31, 1996 and paid insurance assessments before then to be eligible. A successor is defined as an institution resulting from a merger, consolidation, or the acquisition of 90% of an institution's assets and deposit liabilities. Qualifying insured institutions, including over 7,300, can use the credit to offset future assessments charged by the FDIC.
"There is seldom an option where everybody is happy, but in the end, the FDIC sought to craft a fair rule that was very responsive to the comment letters received on the proposed rule," FDIC Chairman Sheila C. Bair commented. "The system is legally grounded as well as operationally feasible and is consistent with the purpose of the one-time credit–that is, to recognize the contributions that certain institutions made to capitalize the funds."
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The rule also allows for an administrative process to challenge the amount of the credit that the FDIC calculates. Institutions will have 30 days after the effective date of the final rule and receipt of the Statement of One-Time Credit to advise the FDIC if they disagree with their credit amount.
The board also approved a temporary system to provide dividends to insured institutions, which will sunset in two years, at which time the FDIC anticipates approving a permanent system.
The Independent Community Bankers of America expressed their disappointment loud and clear. "ICBA is disappointed that the FDIC Board defined 'successor' under the Reform Act as only the resulting institution in a merger or consolidation," ICBA Executive Vice President and Director of Government Relations Karen Thomas said. "This approach penalizes community banks that have purchased deposits during the last ten years since it doesn't include the assuming institution in a deposit purchase transaction. We would have preferred the FDIC use both 'follow the deposit' and 'follow the charter' approaches to ensure a fair allocation of the one-time assessment credits." –[email protected]
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