The biggest banks will pay to replenish the FDIC's deposit insurance fund, report says
Thomson Reuters
- The FDIC will have the biggest banks foot most of the bill to replenish its insurance fund, per Bloomberg.
- People familiar said the FDIC is preparing a report that will detail its fundraising plans.
- The plan will include exempting smaller lenders with less than $10 billion assets from paying fees.
The biggest banks in the US may be on the hook for fees that will go toward refilling the Federal Deposit Insurance Corporation's fund for insuring bank deposits, Bloomberg reported on Thursday.
The FDIC is preparing a report that will be released in the coming week, which will detail how the regulator will replenish its deposit insurance fund, sources told Bloomberg. The fundraising plans involve charging the biggest US banks hefty fees, though smaller banks with assets under $10 billion will be spared.
Bigger banks may face higher charges, due to factors like the size of its balance sheet and number of depositors, the sources said. Banks with less than $50 billion in deposits could potentially avoid fees, they added, such as by making payments into the fund spread out over the following two years.
The FDIC insures all deposits up to $250,000 in the event a bank fails.
The fund has taken a hit amid this year's slew of bank failures. To quell banking turmoil, the regulator promised to fully back depositors, even those with deposits over $250,000, at the collapsed Silicon Valley Bank and Signature Bank in early March, though that will cost the fund over $20 billion, it estimated.
Fears of a banking crisis have been on the rise again this week since the seizure and sale of First Republic Bank to JPMorgan on Monday. JPMorgan CEO Jamie Dimon predicted that bank collapses were largely over, but a panic-driven sell off led shares of PacWest and Western Alliance to plunge on Tuesday, sparking a renewed bout of volatility in the sector.