FDIC Considering Making Big Banks Pay “Special Assessment” After Bank Failures
The Federal Deposit Insurance Corporation (FDIC), which is facing almost $23 billion worth of outstanding costs resulting from recent bank collapses, is considering shifting a significant portion of this financial burden onto some of the country’s largest banks. Bloomberg reported that the FDIC is set to suggest a “special assessment” in May that aims to recover some of the $128 billion deposit insurance fund that suffered from the fallout of Signature Bank and Silicon Valley Bank’s failures. This proposal aims to move the financial burden from community lenders towards big banks such as JPMorgan, Chase & Co. and Bank of America, which, in any case, pay billions of dollars into the Deposit Insurance Fund.
However, these assessments are still in their early stages, and the details of the matter may change. According to insiders familiar with the situation, looking to the major banks to bear the brunt of the cost is perceived as the most feasible solution. Concerning the FDIC, the Deposit Insurance Fund is mainly funded via quarterly evaluations of insured banks’ lenders, determined by multiplying the assessment rate by the assessment base.
Despite the recent fall of these two giant banks, the Biden administration allegedly assured Americans that their funds would be secured and even the accounts with over $250,000 of the FDIC’s threshold. The administration further stated that taxpayers would not bear the direct cost of the two banks’ failure, according to the New York Post report.
Nevertheless, there are still some skeptics about how finances will work out in the upcoming years. Republican Senator John Boozman reportedly told Janet Louise Yellen, “I’m worried that Arkansans will need to subsidize Silicon Valley Bank and Signature Bank deposits, and maybe others that come forward. Will the special evaluation impact the local banks?” Yellen replied that the FDIC has considerable leverage over which financial institutions will pay.
It is yet to see how the bank crisis will impact the average American.
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