Federal Deposit Insurance Corporation Amended Restoration Plan, 9564 [E9-4582]

Download as PDF 9564 Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices FEDERAL DEPOSIT INSURANCE CORPORATION Federal Deposit Insurance Corporation Amended Restoration Plan AGENCY: Federal Deposit Insurance Corporation (FDIC). ACTION: Amendment of Federal Deposit Insurance Corporation restoration plan. On October 7, 2008, the FDIC established a Restoration Plan for the Deposit Insurance Fund (the DIF or the fund), which was implemented immediately. The Restoration Plan called for the FDIC to set assessment rates such that the reserve ratio would return to 1.15 percent within five years, which required an increase in assessment rates. Thus, on October 7, 2008, the Board adopted a notice of proposed rulemaking (NPR) that proposed, among other things, to increase assessment rates uniformly by seven basis points effective January 1, 2009, and substantially revise the assessment system and reset assessment rates effective April 1, 2009. The FDIC received many comments from industry trade groups and banks regarding the proposed increases in assessment rates. Many of the comments were critical of the proposed assessment rate increases. Several commenters urged the FDIC to take advantage of the flexibility that Congress provided to extend the restoration period beyond five years under ‘‘extraordinary circumstances.’’ As the trade groups and many other commenters noted, the law allows the FDIC to take longer than five VerDate Nov<24>2008 19:18 Mar 03, 2009 Jkt 217001 years for the reserve ratio to reach 1.15 percent due to ‘‘extraordinary circumstances.’’ In recognition of the current severe strains on banks and the financial system, the FDIC has concluded that the problems facing the financial services sector and the economy at large constitute such extraordinary circumstances. Since the NPR was published, earnings and capital levels of insured institutions have continued to decline and the credit markets remain under significant stress. Industry losses in the fourth quarter of 2008 were the largest in the 25 years that insured institutions have reported quarterly earnings. Given the enormous stresses on financial institutions and the likelihood of a prolonged and severe economic recession, the FDIC is amending its Restoration Plan to extend the restoration period, as described below. The assessment rates that the FDIC is adopting in the accompanying final rule reflect this extended period. Therefore, the FDIC amends the Restoration Plan adopted on October 7, 2008, as follows: 1. The period of the Restoration Plan is extended to seven years. 2. The FDIC will have the accompanying final rule published in the Federal Register as soon as possible. 3. In addition, the FDIC will also have the accompanying interim rule imposing a special assessment published in the Federal Register as soon as possible. Under this interim rule, the FDIC will impose an emergency special assessment equal to PO 00000 Frm 00001 Fmt 4701 Sfmt 4703 20 basis points of an institution’s assessment base on June 30, 2009. 4. The FDIC projects that the rates adopted in the final rule combined with the special assessment should return the fund reserve ratio to 1.15 percent within seven years, that is, by December 31, 2015. 5. At least semiannually hereafter, the FDIC will update its loss and income projections for the fund and, if needed to ensure that the fund reserve ratio reaches 1.15 percent within the sevenyear period, will increase assessment rates, following notice-and-comment rulemaking if required. If consistent with the fund reserve ratio reaching 1.15 percent within the seven-year period (or such shorter period as the FDIC may determine), the FDIC may also lower assessment rates, again following noticeand-comment rulemaking if required. 6. Institutions may continue to use assessment credits (for regular quarterly assessments and for special assessments) without additional restriction (other than those imposed by law) during the term of the Restoration Plan, since the few remaining credits should have only a minimal effect on fund revenue. 7. This amended Restoration Plan shall be implemented immediately. Dated at Washington DC, this 27th day of February, 2009. By order of the Board of Directors. Robert E. Feldman, Executive Secretary. [FR Doc. E9–4582 Filed 2–27–09; 4:15 pm] BILLING CODE 6714–01–P E:\FR\FM\04MRN2.SGM 04MRN2

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[Federal Register Volume 74, Number 41 (Wednesday, March 4, 2009)]
[Notices]
[Page 9564]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4582]



Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / 
Notices

[[Page 9564]]


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FEDERAL DEPOSIT INSURANCE CORPORATION


Federal Deposit Insurance Corporation Amended Restoration Plan

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Amendment of Federal Deposit Insurance Corporation restoration 
plan.

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    On October 7, 2008, the FDIC established a Restoration Plan for the 
Deposit Insurance Fund (the DIF or the fund), which was implemented 
immediately. The Restoration Plan called for the FDIC to set assessment 
rates such that the reserve ratio would return to 1.15 percent within 
five years, which required an increase in assessment rates. Thus, on 
October 7, 2008, the Board adopted a notice of proposed rulemaking 
(NPR) that proposed, among other things, to increase assessment rates 
uniformly by seven basis points effective January 1, 2009, and 
substantially revise the assessment system and reset assessment rates 
effective April 1, 2009.
    The FDIC received many comments from industry trade groups and 
banks regarding the proposed increases in assessment rates. Many of the 
comments were critical of the proposed assessment rate increases. 
Several commenters urged the FDIC to take advantage of the flexibility 
that Congress provided to extend the restoration period beyond five 
years under ``extraordinary circumstances.'' As the trade groups and 
many other commenters noted, the law allows the FDIC to take longer 
than five years for the reserve ratio to reach 1.15 percent due to 
``extraordinary circumstances.''
    In recognition of the current severe strains on banks and the 
financial system, the FDIC has concluded that the problems facing the 
financial services sector and the economy at large constitute such 
extraordinary circumstances. Since the NPR was published, earnings and 
capital levels of insured institutions have continued to decline and 
the credit markets remain under significant stress. Industry losses in 
the fourth quarter of 2008 were the largest in the 25 years that 
insured institutions have reported quarterly earnings. Given the 
enormous stresses on financial institutions and the likelihood of a 
prolonged and severe economic recession, the FDIC is amending its 
Restoration Plan to extend the restoration period, as described below. 
The assessment rates that the FDIC is adopting in the accompanying 
final rule reflect this extended period.
    Therefore, the FDIC amends the Restoration Plan adopted on October 
7, 2008, as follows:
    1. The period of the Restoration Plan is extended to seven years.
    2. The FDIC will have the accompanying final rule published in the 
Federal Register as soon as possible.
    3. In addition, the FDIC will also have the accompanying interim 
rule imposing a special assessment published in the Federal Register as 
soon as possible. Under this interim rule, the FDIC will impose an 
emergency special assessment equal to 20 basis points of an 
institution's assessment base on June 30, 2009.
    4. The FDIC projects that the rates adopted in the final rule 
combined with the special assessment should return the fund reserve 
ratio to 1.15 percent within seven years, that is, by December 31, 
2015.
    5. At least semiannually hereafter, the FDIC will update its loss 
and income projections for the fund and, if needed to ensure that the 
fund reserve ratio reaches 1.15 percent within the seven-year period, 
will increase assessment rates, following notice-and-comment rulemaking 
if required. If consistent with the fund reserve ratio reaching 1.15 
percent within the seven-year period (or such shorter period as the 
FDIC may determine), the FDIC may also lower assessment rates, again 
following notice-and-comment rulemaking if required.
    6. Institutions may continue to use assessment credits (for regular 
quarterly assessments and for special assessments) without additional 
restriction (other than those imposed by law) during the term of the 
Restoration Plan, since the few remaining credits should have only a 
minimal effect on fund revenue.
    7. This amended Restoration Plan shall be implemented immediately.

    Dated at Washington DC, this 27th day of February, 2009.

    By order of the Board of Directors.
Robert E. Feldman,
Executive Secretary.
 [FR Doc. E9-4582 Filed 2-27-09; 4:15 pm]
BILLING CODE 6714-01-P