Summary: | The FDIC is seeking comment on the attached proposed guidelines for determining how adjustments of up to 0.50 basis points would be made to the quarterly assessment rates of insured institutions defined as large (generally over $10 billion) Risk Category I institutions, and insured foreign branches in Risk Category I, according to the Final Assessments Rule (71 FR 69282, Nov. 30, 2006). These guidelines are intended to further clarify the analytical processes and the controls applied to these processes in making assessment rate adjustments. Comments on these proposed guidelines are due by March 23, 2007. |
Highlights:
The FDIC proposes a set of ten guidelines that would govern the process for determining when an assessment rate adjustment is appropriate and the magnitude of the adjustment. The proposal also lists and discusses the types of information that would be considered in making assessment rate adjustments, as well as controls over the analytical process to help ensure that any adjustments are reasonable and well supported.
Continuation of FIL-19-2007
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Financial Institution Letters
FIL-19-2007 February 27, 2007 |
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Deposit Insurance Assessments
The FDIC is seeking comment on the attached proposed guidelines for determining how adjustments of up to 0.50 basis points would be made to the quarterly assessment rates of insured institutions defined as large Risk Category I institutions, and insured foreign branches in Risk Category I, according to the Final Assessments Rule (71 FR 69282, Nov. 30, 2006). These guidelines are intended to further clarify the analytical processes and the controls applied to these processes in making assessment rate adjustment determinations. Comments on these proposed guidelines are due by March 23, 2007. Objective of Assessment Rate Adjustments As indicated in the Final Assessments Rule, the initial assessment rates of large institutions in Risk Category I will be determined by a combination of supervisory ratings, long-term debt issuer ratings, and financial ratios for institutions that have no long-term debt issuer ratings. The Final Assessment Rule also indicated that FDIC may determine, in consultation with the primary federal regulator, whether limited adjustments to these initial assessment rates are warranted based upon consideration of additional risk information. Although the FDIC expects that such adjustments will be made relatively infrequently and for a limited number of institutions, adjustments may on occasion be necessary to preserve consistency in the orderings of risk indicated by these assessment rates, ensure fairness among all large institutions, and ensure that assessment rates take into account all available information that is relevant to the FDIC's risk-based assessment decision. Purpose of the Proposed Guidelines The Final Assessments Rule acknowledged the need to further clarify its processes for making assessment rate adjustments and indicated no adjustments would be made until these additional guidelines were approved by the FDIC's Board. The attached proposal contains a set of guidelines intended to provide transparency to the analytical process for determining whether assessment rate adjustments are warranted. The attached proposal also contains guidelines relating to controls over the assessment rate adjustment process, a listing of the types of comprehensive and focused risk measures used in the analytical process, and an illustrative example of the proposed analytical process. Overview of the Assessment Rate Adjustment Process
Institutions are encouraged to provide comment on all aspects of the proposed guidelines as well as comment on directed questions pertaining to whether and how the FDIC should evaluate various categories of information such as stress considerations, qualitative loss severity information, the potential availability of parent company and affiliate support, risk information developed from the implementation of proposed international capital standards, and the existence of supervisory orders that may be less directly related to an institution's safety and soundness.
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Additional Related Topics:
- FDIC Assessments Regulations
- 12 C.F.R. 327