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Reform of Deposit Insurance

Assessment Rate Calculator (Updated September 29, 2009)
View a calculator that illustrates deposit insurance assessment rates effective April 1, 2009 under the final rule implementing a revised risk-based assessment system - PDF 406KB (PDF Help). The calculator applies to all institutions. This calculator also estimates the prepaid assessment amount per the notice of proposed rulemaking adopted by the FDIC Board on September 29, 2009.

Deposit Insurance Reform Legislation
On February 8, 2006, the President signed The Federal Deposit Insurance Reform Act of 2005 (the Reform Act) into law. The Federal Deposit Insurance Reform Conforming Amendments Act of 2005, which the President signed into law on February 15, 2006, contains necessary technical and conforming changes to implement deposit insurance reform, as well as a number of study and survey requirements. (Collectively, the Reform Act.) View highlights of the Reform Act.

Reform Act Implementing Regulations

Highlights of the Reform Act
The Reform Act provides for the following changes:

  • Merging the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) into a new fund, the Deposit Insurance Fund (DIF). This change was made effective March 31, 2006.
  • Increasing the coverage limit for retirement accounts to $250,000 and indexing the coverage limit for retirement accounts to inflation as with the general deposit insurance coverage limit. This change was made effective April 1, 2006.
  • Establishing a range of 1.15 percent to 1.50 percent within which the FDIC Board of Directors may set the Designated Reserve Ratio (DRR).
  • Allowing the FDIC to manage the pace at which the reserve ratio varies within this range.

    1. If the reserve ratio falls below 1.15 percent–or is expected to within 6 months–the FDIC must adopt a restoration plan that provides that the DIF will return to 1.15 percent generally within 5 years.
    2. If the reserve ratio exceeds 1.35 percent, the FDIC must generally dividend to DIF members half of the amount above the amount necessary to maintain the DIF at 1.35 percent, unless the FDIC Board, considering statutory factors, suspends the dividends.
    3. If the reserve ratio exceeds 1.5 percent, the FDIC must generally dividend to DIF members all amounts above the amount necessary to maintain the DIF at 1.5 percent.

  • Eliminating the restrictions on premium rates based on the DRR and granting the FDIC Board the discretion to price deposit insurance according to risk for all insured institutions regardless of the level of the reserve ratio.
  • Granting a one-time initial assessment credit (of approximately $4.7 billion) to recognize institutions' past contributions to the fund.
  • The Federal Deposit Insurance Reform Conforming Amendments Act of 2005 requires the FDIC to conduct studies of three issues: (1) further potential changes to the deposit insurance system, (2) the appropriate deposit base in designating the reserve ratio, and (3) the Corporation's contingent loss reserving methodology and accounting for losses.
  • The 2005 act requires the Comptroller General to conduct studies of (1) federal bank regulators' administration of the prompt corrective action program and recent changes to the FDIC deposit insurance system, and (2) the organizational structure of the FDIC.

Additional Links
Remarks by Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation; Before the New York Bankers Association; Washington, D.C. July 19, 2006.
Statement of Acting Chairman Gruenberg on the passage of deposit insurance reform legislation February 1, 2006
Statement of Donald E. Powell Chairman Federal Deposit Insurance Corporation on Deposit Insurance Reform Before the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services U.S. House of Representatives March 17, 2005
Chairman Powell's testimony on deposit insurance reform to the House March 4, 2003
Chairman Powell's testimony on deposit insurance reform to the Senate February 26, 2003
Chairman Powell's testimony on deposit insurance reform to the Senate April 23, 2002
FDIC Chairman Tanoue speaks before the Annual Convention Of the Independent Community Bankers of America March 7, 2000

Related Articles
Options for Pricing Federal Deposit Insurance (115kb PDF file - PDF help or hard copy)
FDIC Banking Review, Vol 15, No 4, December 2003
Deposit Insurance: An Annotated Bibliography:
Lists and abstracts more than 700 books, journal articles, and other publications on deposit insurance.
Reform of Deposit Insurance: State of the Debate (250Kb PDF file - PDF help or hard copy)
FDIC Banking Review, December 1999

Recommendations for Deposit Insurance Reform, April 2001
On April 5, the FDIC issued recommendations for strengthening the deposit insurance system, including merging the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF), and adopting a more risk-based system for charging insurance premiums.

Household Survey on Deposit Insurance Awareness, April 2001
A report on responses to a survey by the Gallup Organization in November - December 2000.

Reform of Deposit Insurance: A Report to the FDIC, March 2001
A paper that reviews the basic principles undergirding deposit insurance, that summarizes the perceived problems with deposit insurance today, and that outlines an approach to reforming deposit insurance.

Options Paper, August 2000
The FDIC has issued an Options Paper that summarizes alternatives for pricing, funding, and coverage of deposit insurance (PDF version: 482Kb PDF file - PDF help or hard copy).

Roundtable on Deposit Insurance, April 25, 2000
On April 25, 2000, the FDIC hosted the first of a series of roundtable discussions. The session has been transcribed and the meeting material is available below.

Position Papers
Roundtable presentations by representatives of bankers, other financial professionals, and academic experts.
Last Updated 10/01/2009 insurance-research@fdic.gov