WASHINGTON – Saying that the increases in bank failures have caused a strain on the insurance system, the FDIC today announced a 7 basis point increase in premiums starting next year.
Banks currently pay between 5 and 43 basis points (between 5 cents and 43 cents for each $100 of deposits). Under the new rate structure the range will increase to between 12 and 50 basis points with most banks being charged between 12 and 14 basis points, according to the regulatory agency.
With higher levels of bank failures, the FDIC's resolution costs have increased significantly. This assessment increase creates a path for the fund to return to its statutorily mandated level," FDIC Chairman Sheila C. Bair said in a statement.
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"The banking system is the bedrock of our economy and deposit insurance has played a vital role in providing stability to the system. Maintaining a strong fund positions the FDIC well to handle future challenges."
ABA President and CEO Ed Yingling said banks are capable are meeting the new premium structure.
"The premium increases announced today by the FDIC are significant, and even though they pose an extra burden on every bank, the industry is quite capable of meeting this obligation," he said in a statement. "Based on the FDIC's data for the third quarter, banks had $1.3 trillion in equity capital, more than 98 percent of banks are considered 'well capitalized,' and bank reserves now exceed $156 billion. This makes for a total buffer of nearly $1.5 trillion against losses.
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