Regarding the Deposit Insurance Fund (DIF) balance, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provides the following:
- Establishes a minimum Designated Reserve Ratio (DRR) of 1.35 percent of estimated insured deposits or the comparable percentage of the new assessment base, average consolidated total assets minus average tangible equity.
- If the reserve ratio falls below 1.35 percent, or the FDIC projects that the reserve ratio will, within 6 months, fall below 1.35 percent, the FDIC generally must adopt a restoration plan that provides that the DIF will return to 1.35 percent within 8 years.
- Notwithstanding that 8 year requirement, however, the FDIC must take steps as necessary for the reserve ratio to reach 1.35 percent of estimated insured deposits by September 30, 2020.
- The FDIC must offset the effect on small institutions (less than $10 billion in assets) of the requirement that the reserve ratio reach 1.35 percent by September 30, 2020, rather than 1.15 percent by the end of 2016.
- If the reserve ratio exceeds 1.5 percent, the FDIC must dividend to DIF members the amount above the amount necessary to maintain the DIF at 1.5 percent, but the FDIC Board of Directors may, in its sole discretion, suspend or limit the declaration of payment of dividends.
- For at least five years, the FDIC must make available to the public the reserve ratio and the Designated Reserve Ratio using both estimated insured deposits and the new assessment base.
Each year, the FDIC sets and publishes the DRR for the following year. The following table shows the DRR set for 2007-2012.
As the reserve ratio dropped below 1.25 percent near the end of 2006, the FDIC began taking steps to maintain the Fund balance and liquidity. Following are the related actions taken by the FDIC Board since then.
- Outlook for the Deposit Insurance Fund (DIF) - May 7, 2007 HTML
- Economic Conditions and Emerging Risks in Banking – November 2, 2006 HTML
Rule on Risk-Based Assessments – November 2, 2006 HTML