Risk - Based Assessment System SAIF Assessment Rates for the Second Semiannual Assessment Period of 2003
Board of Directors
Arthur J. Murton, Director Division of Insurance
SAIF Assessment Rates for the Second Semiannual Assessment Period of 2003
The staff recommends that the Board maintain the existing Savings Association Insurance Fund (SAIF) assessment rate schedule of 0
to 27 basis points (bp)1
per year. This rate schedule complies with the statutory requirements for the Board to establish a risk-based assessment system and set
assessments only to the extent necessary to maintain SAIF at the Designated Reserve Ratio (DRR), currently 1.25 percent.
The reserve ratio for the SAIF stood at 1.37 percent as of December 31, 2002. Although not all first quarter Call Reports
have been filed yet, the best available information indicates that the SAIF
reserve ratio remained above 1.25 percent as of March 31, 2003. The staff
believes there is a reasonable probability that the reserve ratio will remain
above 1.25 percent during the upcoming semiannual assessment period. Therefore,
the staff recommends maintaining the existing assessment rate schedule for this
assessment period. Based on December 31, 2002, data and projected ranges for the relevant variables at
December 31, 2003, this rate schedule would result in an average annual assessment rate of approximately 0.13 bp.
Staff has considered a range of plausible events that could produce significant movements to the SAIF reserve ratio. In this case, the staff
has taken a somewhat different approach than in prior cases submitted to the Board; however, this new approach does not result in a different recommendation
than the prior methodology would have produced. The previous methodology provided a range of adverse scenarios, with little upside, and no best estimate.
Our new methodology provides ranges for estimated insurance losses, primarily based on estimated changes to the contingent loss reserve for financial
institution failures; changes in both interest income and in the market value of available-for-sale (AFS) securities resulting from changes in interest rates;
and growth of insured deposits. The ranges resulting from the new methodology are statistically meaningful and are narrower than ranges presented with the
In setting assessment rates since the recapitalization of the SAIF, the Board
has considered: (1) the probability and likely amount of loss to the fund posed
by individual insured institutions; (2) the statutory requirement to maintain
the fund at the DRR, currently 1.25 percent, and (3) all other relevant
Current SAIF Reserve Ratio The SAIF reserve ratio was 1.37 percent as of December 31, 2002, the latest date for which complete data are available. Some data are
available that give a preliminary indication of the SAIF reserve ratio as of March 31, 2003. The fund balance, which is the numerator of the reserve ratio,
rose by $159 million to $11.906 billion (unaudited), up from $11.747 billion on December 31, 2002. This increase was primarily supported by significant
unrealized gains on available-for-sale securities. As in prior periods, interest and assessment income more than covered basic operating expenses.
Final data on the level of insured deposits, the denominator for the reserve ratio, are not available at this time because not all March 31, 2003, Call
Reports have been filed. Beginning on May 1, staff conducted a telephone survey to determine insured deposits at 11 of the largest insured financial
institutions.3 The survey results combined with preliminary information from Call
Reports already received indicate that SAIF-insured deposits increased by approximately 1.01 percent in the first quarter and stood at about $869 billion
as of March 31, 2003. While this information does not provide an exact amount of insured deposits, it does provide a reasonable estimate of first quarter insured
The information preliminarily indicates that the SAIF reserve ratio stood at approximately 1.37 percent as of March 31, 2003. Final data will be published
later this quarter after all March 31, 2003 Call Reports are received and edited.
Projections for the SAIF Reserve Ratio Over the Next Assessment Period Staff's best estimate for the SAIF reserve ratio as of December 31, 2003 is 1.35 percent. The lower and upper bounds of the likely
range for the SAIF reserve ratio as of December 31, 2003 are 1.29 percent to 1.41 percent, respectively. The entire estimated range is above the statutory
requirement of 1.25 percent, so staff believes the ratio will remain above the DRR.
The following is an analysis of the anticipated effect of changes in the fund balance and the rate of insured deposit growth on the
reserve ratio through December 31, 2003.
1. Fund Balance Staff evaluates three significant inputs in estimating
changes to the fund balance. First, staff estimates the impact of insurance
losses, which are primarily losses from failed institutions. Second, staff
estimates the amount of interest income that the fund will receive during the
year. Third, staff projects the level of unrealized gains and losses on
available-for-sale (AFS) securities that will be present at the end of the
A. Insurance Losses Insurance losses primarily consist of two components: a contingent liability for future failures and an
allowance for losses on institutions that have already failed. The Financial Risk Committee (FRC) recommends the amount of the contingent liability for
failures each quarter, and this recommendation represents the FRC’s best estimate of SAIF losses from institution failures. It reflects the staff's
view of those potential losses that are "probable and estimable," as required by generally accepted accounting principles. Actual results could
differ from these estimates. As of December 31, 2002 the SAIF loss reserve stood at $90 million. The SAIF loss reserve declined to $69 million as of March 31,
In prior cases submitted to the Board, a range of possible insurance losses was estimated by using a proportion of the FRC's
two-year projected range of failed-institution assets. Beginning with this case, in addition to considering the FRC's projected range of failed-institution
assets, staff is estimating a likely range of insurance losses based on projected changes in the contingent loss reserve. Several factors drive changes
in the contingent loss reserve for the twelve months ending December 31, 2003. These factors include: (1) the shifting of problem institutions among different
risk categories within the reserve, (2) the movement of institutions out of the reserve due to improved financial conditions, mergers, or failures, and (3) the
addition of new problem institution assets to the reserve. To adequately capture the effects of these changes, staff estimated the probabilities of institutions
moving within categories, entering, or leaving the contingent loss reserve. These probabilities were based on the recent history of changes to the reserve.
Based on this analysis, staff estimates that the contingent loss reserve balance will range from $7 million to
$112 million at year-end 2003. Table 1 shows the range of potential loss provisions based on changes in the contingent loss reserve, adjustments for net
losses/recoveries due to the resolution of closed banks, adjustments for litigation losses, and adjustments for other contingencies. As a baseline
scenario, staff assumes that the current balance of the contingent loss reserve correctly provides for probable and estimable losses from future failures, so
that no additional provisions would be required for the remainder of 2003. Therefore, in staff’s best estimate of the reserve ratio, a zero provision is
Potential Provisions and Adjustments for Loss Allowances
For the Year Ending December 31, 2003
Provision Related to Future Failures (1)
Adjustment for Closed Banks Net Recoveries (2)
Adjustment for Litigation Losses (3)
Potential Increase in Provision for Losses
Includes provisions required to account for the differences between the
actual balance of the contingent loss reserve on December 31, 2002 ($90
million) and the December 31, 2003, balance estimated by statistical analysis.
Changes in the contingent loss reserve occur from reductions in reserves after
failures, reductions in reserves from improvement in institutions’
conditions, and additions of reserves due to institutions’ deterioration.
Assumes a range of -5% to +5% of the estimated net recovery value of bank
resolutions, $505 million as of December 31, 2002.
Based on the standard deviation of changes in the contingent liability for
litigation losses for the period 1998 to 2002.
Staff believes that the range provided by the
statistical analysis adequately represents the most likely range of additional
provisions needed to cover insurance losses from future failures. However, the
bounds of this range do not represent "best case" and "worst
case" scenarios, and larger or smaller provisions could occur. Although
larger or smaller provisions are possible, conditions in the banking industry
are relatively favorable, and staff believes that current industry trends do not
foreshadow widespread deterioration in the industry. The level of insurance
losses will depend on the future condition of the economy and its effect on the
banking industry. Staff has considered various economic scenarios and believes
that a slow-growth recovery is most likely. However, the source of this recovery
may have to come from business sector spending rather than consumer spending, a
mainstay of previous economic growth. Furthermore, uncertainties such as
concerns about corporate governance, oil price volatility, or the possibility of
further terrorist attacks could adversely affect the speed of any economic
B. Interest Income and Unrealized Gains and Losses on AFS Securities Staff has adopted a new methodology to identify a likely range of potential
interest rate movements over the next year. In previous cases, staff modeled
parallel shifts in interest rates (in the last two cases, plus 150 bp or minus
50 bp) to represent possible changes in interest rates over the assessment
period. However, the prior methodology did not provide for the possibility of
nonparallel yield curve shifts. Also, the shift magnitudes were designed to
represent extreme changes in rates, but they were derived in a largely ad hoc
manner. Furthermore, the same rates were applied throughout the entire
assessment period, when in fact interest rates may change over time. Finally,
the prior method precluded any estimation of the expected interest
income and AFS unrealized gain/(loss) on AFS securities by providing only
extreme bounds within which interest rates may fall.
The staff attempted to overcome these shortcomings by adopting a more
analytical methodology to projecting interest rates. In particular, the
interest rate projections were derived from a statistical model using experts’
predictions as detailed in the Blue Chip Financial Forecasts. Upon
identifying the ten most accurate experts over the entire 2001-2002 period,
staff developed a statistical model that produced forecasts for interest rates4
for each quarter of 2003 based upon the experts’ forecasts over the same
period. This methodology produced projected yield curves that changed in shape
Along with calculating expected yield curves,
staff also calculated bounds within which interest rates are likely to fall
using the statistical model. These bounds vary over the Assessment period and
change in shape over time, as opposed to being parallel shifts in rates.
The bounds are consistent with the notion
that the projections represent the most likely scenarios and that the true rates
may be above or below the projections.5
In general, the projections indicate stable or slightly rising rates for the period under consideration. The lower
bound generally reflects rates that are as much as one percentage point lower
than current rates, while the upper bound reflects rates that may be
approximately one-quarter percentage point to two percentage points higher than
current rates. Charts showing the projected rates, upper bound, lower bound, and
comparisons with the March 2003 yield curve are included as Attachment 1 to this
case. Using the projected rates, staff estimates future interest income and AFS
Table 2 projects low, best, and high estimates for interest income and
unrealized gains and losses on AFS securities using the projected rates and the
bounds. Because of the significant percentage of AFS securities held in the
insurance fund portfolio at this time, when interest rates change, the magnitude
of the resulting change in market value of these securities dominates the effect
of changes in interest income.
Potential Changes in Interest Income and Unrealized Gains (Losses) on AFS Securities
December 31, 2002 to December 31, 2003 ($ in millions)
Low Estimate (1)
Best Estimate (1)
High Estimate (1)
Unrealized Gain (Loss) on AFS Securities (2)
The Low Estimate is calculated using upper bound interest rates, the Best
Estimate is calculated using the projected rates, and the High Estimate is
calculated using the lower bound rates. Net estimated failure resolution
outlays equal $255 million for the Low Estimate and zero for the Best and
Includes actual unrealized gains on AFS securities for the period January
1, 2003 through February 28, 2003 and projected gains/losses through
December 31, 2003.
Staff does not anticipate dramatic changes
in bond market rates. The slightly rising interest rate environment forecasted
in the best estimate is consistent with (in fact, slightly lower than) the
April consensus predictions in Blue Chip Financial Forecasts. The
forecasted interest rates used for the best estimate are also consistent with
a slow-growth economic recovery. In recent weeks, uncertainty about the
direction of the economy has increased somewhat. If these uncertainties
continue, or if growth fails to develop, market rates could remain steady or
decline. In such a scenario, the potential negative impact to AFS securities
would not be as great as projected in the best estimate. Nevertheless, as the
remaining maturity of the AFS portfolio shortens, there is a strong likelihood
that previously identified unrealized gains will be given back. In addition,
falling interest rates would be detrimental to interest income in the long
C. Projected Fund Balance. Table 3 summarizes the effects on the fund balance of the
low, best, and high estimates assumed for insurance losses, interest income,
and unrealized gains and losses on AFS securities. The projection also assumes
that the current assessment rate schedule will remain in effect through
December 31, 2003.
Projected Fund Balance (1)
($ in millions)
Interest Income (3)
Provision for Losses
Total Expenses & Losses
Unrealized Gain (Loss) on AFS Securities (3)
Comprehensive Income (Loss) (5)
Fund Balance – 12/31/02
Projected Fund Balance – 12/31/03
Projected income and expense figures are for the twelve months ending
December 31, 2003.
Assumes that the current assessment rate schedule remains in effect through
December 31, 2003.
See also Table 2 for an explanation regarding changes in interest revenue
and unrealized gain (loss) on AFS securities under these projections.
Operating expenses for 2003 allocated to the SAIF are estimated based on the
FDIC’s 2003 budget.
Comprehensive Income is used instead of Net Income due to the magnitude of
the change in market value of AFS securities that occurs with fluctuations in
interest rates. See note (3) above.Columns may not add exactly due to rounding
of component items.
2. Insured Deposits
Since 1989, the annual growth rate for SAIF-insured deposits
has been as high as 7.4 percent and as low as negative 6.5 percent (Figure 1).
After declining from 1989 through 1993, insured deposits grew 2.2 percent and
2.7 percent in 1994 and 1995, respectively. After a contraction in 1996 (minus
3.9 percent) and minimal growth between 1997 and 1999 (1.0 percent, 3.8 percent,
and 0.2 percent respectively), insured deposits grew by 5.2 percent in 2000, 6.1
percent in 2001, 7.4 percent in 2002, and are projected to grow at a rate of 3.9
percent in 2003. Equity market declines and volatility have factored into
the recent strong growth in insured deposits.
It takes approximately $6.3 billion in insured deposit growth to create a 1
basis point decline in the SAIF reserve ratio, all other things held constant.
Based upon the March 31, 2003, fund balance, it would take about $92.1 billion
in insured deposit growth (10.7 percent) to reduce the reserve ratio to the DRR,
all else being equal. Our estimates indicate that deposit growth in 2003 will be
far lower than this figure.
Previous cases presented to the Board estimated insured deposit growth as
falling within a range of +2 percent to +6 percent. For this case, staff
developed a statistical model to project an expected rate of insured deposit
The model indicates that the likely rate of insured deposit growth for 2003 is
3.9 percent. This rate of growth would bring the total of SAIF- insured deposits
to $894 billion. The likely range of insured deposit growth is +0.8 percent to
+7.1 percent. This range represents the confidence interval in the estimated
model. Staff has backtested the model and believes that it provides a reasonable
estimation of insured deposit growth. The model estimates future growth rates in
insured deposits through historical growth rates in insured and total deposits
and, as such, does not explicitly incorporate economic shocks into the
projection. However, some events that could force insured deposits into the high
range of our forecast are a depressed stock market with high volatility as well
as monetary expansion. An upturn in the stock market could force insured
deposits into the low range of our forecast.
3. SAIF Reserve Ratio
Based on the projected SAIF balance and the projected growth
of the insured-deposit base, the staff expects the SAIF reserve ratio to be
within the range of 1.23 percent to 1.39 percent at June 30, 2003 (Table 4). The
low estimate, which represents a 15 bp decrease in the reserve ratio from June
30, 2002, assumes a strong increase in the insured deposit base (+6 percent) and
a higher interest rate scenario, resulting in a downward adjustment to the fund
balance due to a reduction in the aggregate amount of unrealized gains on AFS
securities (Table 3). The low estimate incorporates the high loss estimate for
insurance fund losses from possible near-term failures as projected by the
staff; the estimates are not intended to represent a "worst-case"
The high estimate represents a 1 bp increase in the reserve
ratio from June 30, 2002. It assumes slower growth (+2 percent) in the SAIF-insured
deposit base, the low-loss estimate for insurance losses, and lower interest
rates, resulting in an upward adjustment to the aggregate amount of unrealized
gains on AFS securities.
Projected SAIF Reserve Ratios
($ in millions)
December 31, 2002
Fund Balance (Unaudited)
Estimated Insured Deposits
Low Bound(1) December 31, 2003
Best Estimate (2) December 31,2003
hUpper Bound(3) December 31, 2003
Projected Fund Balance
Estimated Insured Deposits
Estimated SAIF Ratio
The Lower Bound refers to the scenario of higher loss provisions (see
Table 1), higher interest rates (Low Estimate in Table 2), and a higher
insured deposit growth rate (+7.1 percent).
The Best Estimate refers to the scenario of a slight decline in loss
provisions (Best Estimate in Table 1), stable or moderately rising interest
rates (Best Estimate in Table 2), and the insured deposit growth rate
projected by staff (+3.9 percent).
The Upper Bound refers to the scenario of lower loss provisions (see Table
1), stable or moderately declining interest rates (High Estimate in Table
2), and a lower insured deposit growth rate (+0.8 percent).
As mentioned in the Summary, staff used a
different methodology than that used in prior cases presented to the Board to
produce the range shown in Table 4 above. If the previous method had been used,
staff estimates it would have shown a range of 1.26 percent to 1.35 percent. The
previous methodology provided a low end to the projected SAIF range that
incorporated what the FRC considered to be reasonably possible losses rather
than likely insurance losses. Although the low end provided by the previous
methodology remains a possible outcome, the revised methodology refines the
estimation of losses due to failure in order to provide a more likely scenario.
Also, unlike the previous methodology, the revised methodology considers the
possibility that reserves for losses could be reduced due to improvements in the
conditions of financial institutions. In addition, the revised methodology
refines the estimation of the impact that changes in interest rates have on
and provides greater analysis of potential insured deposit growth. Staff
believes that the methodology presented in this case provides a more likely
range for the SAIF reserve ratio.
If the SAIF reserve ratio were to fall anywhere within the bounds presented
in Table 4, the current rate schedule would be sufficient to maintain the
reserve ratio above the DRR through December 31, 2003. Given that the SAIF
reserve ratio is currently greater than 1.25 percent and that staff believes it
is likely to remain so, staff recommends maintaining the existing SAIF rate
Statutory Requirements Regarding the Assessment Rate Schedule The Federal Deposit Insurance Act requires that the Board set semiannual assessment rates:
[W]hen necessary, and only to the extent necessary (I) to
maintain the reserve ratio of each deposit insurance fund at the designated
reserve ratio; or (II) if the reserve ratio is less than the designated
reserve ratio, to increase the reserve ratio to the designated reserve ratio
Because the SAIF reserve ratio is above 1.25 percent as of
December 31, 2002, the Board can raise semiannual assessment rates for the
second half of 2003 only pursuant to clause (I), to maintain the SAIF at 1.25
percent. The statutory provisions that require the FDIC to return the ratio to
1.25 percent when the ratio falls below that target have not been activated.
If the reserve ratio falls below 1.25 percent, Section 7 of
the FDI Act requires that the FDIC restore it to the designated reserve ratio
within one year "after such rates are set". The statute does not
define when "rates are set" and legislative history provides no
guidance on this issue. Based on a plain reading of the statute, it seems
reasonable to use the date on which the Board acts to establish rates for the
upcoming semiannual period. This would comport with the
intent of this provision of Section 7 that the FDIC be given
one year (i.e., two semiannual periods) to increase the reserve ratio to the
designated reserve ratio without being required to impose the minimum assessment
of 23 basis points.
Thus, for example, if final Call Report data show that the
SAIF reserve ratio fell below 1.25 percent as of March 31, 2003 (and remained
below 1.25 percent as of June 30, 2003), the one-year period to re-establish the
reserve ratio to 1.25 percent would begin in November, 2003, when the Board sets
the rates that become effective on January 1, 2004. The FDIC must do one of two
things if the SAIF reserve ratio used to set the January 1, 2004, rates is
below 1.25 percent. The FDIC must either: (1) set assessment rates to achieve
the 1.25 percent by November 2004, which would allow two semiannual periods to
re-establish the 1.25 percent – the periods beginning January 1, 2004 and July
1, 2004 (in addition to any amounts collected during the second half of 2003),
or (2) the FDIC must establish a recapitalization schedule of 15 years or less
and charge 23 basis point minimum average assessments.
Risk-Based Assessment System The staff recommends retaining the current spread of 27 bp
between the assessments paid by the best- and worst-rated institutions as well
as the rate spreads between adjacent cells in the assessment rate matrix. The
proposed assessment rate schedule appears in Table 5.
The Board previously determined that the current rate spreads provide
appropriate incentives for weaker institutions to improve their condition and
for all institutions to avoid excessive risk-taking, consistent with the goals
of risk-based assessments and existing statutory provisions. The current rate
spreads also generally are consistent with the historical variation in failure
rates across cells of the assessment rate matrix.
Proposed Assessment Rate Schedule
Second Semiannual Assessment Period of 2003
In setting assessment rates to achieve and maintain the
reserve ratio at the DRR, the Board is required to consider the effects of
assessments on members’ earnings and capital. The estimated annual revenue
from the existing rate schedule is $13 million, which is $10 million less than
the annual amount that was projected six months ago. In recommending that the
Board maintain this schedule, the staff has considered the impact on thrift
earnings and capital of the current rate schedule and found no unwarranted
The Assessment Base Distribution and Matrix Migration Table 6 summarizes the current distribution of institutions across the
SAIF Assessment Base Distribution (1)
Assessable Deposits as of December 31, 2002
Supervisory Subgroup and Capital Groups in Effect January 1, 2003
Estimated annual assessment revenue $13 million
Assessment Base $990.2 billion
Average annual assessment rate (bp) 0.13 basis points
1. "Number" reflects the number of SAIF members (excludes BIF-Oakar institutions). "Base" reflects all SAIF-assessable deposits.
With 97.8 percent of the number of institutions and 99.7
percent of the assessment base in the three lowest assessment risk
classifications of "1A," "1B," and "2A," as of
January 1, 2003, the current distribution in the rate matrix reflects little
fundamental difference from the previous semiannual assessment period. The
current distribution reflects some shrinkage in the best-rated premium category.
Since the previous assessment period, 17 institutions migrated into the
"1A" risk classification (Table 7), and 26 institutions migrated out
of the "1A" risk classification. Only 116 institutions are currently
classified outside of the best risk classification.
Overall, for all SAIF-insured institutions, the supervisory
subgroup component of the risk classification was upgraded since the previous
period for 16 institutions with an assessment base of $6.1 billion and was
downgraded for 24 institutions with an assessment base of $6.1 billion.
SAIF Migration To and From Assessment Risk Classification "1A"
Institutions entering "1A"
Due to capital group reclassification only
Due to supervisory subgroup reclassification only
Due to both
Institutions leaving "1A"
Due to capital group reclassification only
Due to supervisory subgroup reclassification only
Due to both
Reflects SAIF-insured institutions that moved in and out of assessment risk
classification "1A" from the second semiannual assessment period of
2002 to the first semiannual assessment period of 2003. The numbers only include
institutions that were rated in both periods.
Other Issues FICO Assessment.
The Deposit Insurance Funds Act of 1996
(Funds Act) separates the Financing Corporation (FICO) assessment from the FDIC
assessment, so that the amount assessed on individual institutions by the FICO
is in addition to the amount paid according to the SAIF rate schedule. All
institutions are assessed the same rate by FICO, as provided for in the Funds
Act, and the FICO rate is updated quarterly. The FICO rate for the first
quarterly payment in 2003 will be determined using March 31,
Staff Contacts Karen Denu, Chief, Assessments Evaluation Section, Division of Insurance
(202) 898-3810, or Claude Rollin, Counsel, Legal Division (202) 898-8741. For
FICO assessment information, please contact Richard Jones, Chief, Assessments
Implementation Section, Division of Insurance, at (202) 898-6592.
1Although the current effective rate schedule is 0 to 27 basis points, the base rate schedule, established in 1995, is still 4 to 31 basis points. The FDIC may alter the existing rate structure and may change the base SAIF rates by rulemaking with notice and comment. Without a notice-and-comment rulemaking, the Board has authority to increase or decrease the effective rate schedule uniformly up to a maximum of 5 bp, as deemed necessary to maintain the target DRR.
2The Board is required to review and weigh the following factors when establishing an assessment schedule: a) the probability and likely amount of loss to the fund posed by individual institutions; b) case resolution expenditures and income; c) expected operating expenses; d) the revenue needs of the fund; e) the effect of assessments on the earnings and capital of fund members; and f) any other factors that the Board may deem appropriate. These factors directly affect the reserve ratio prospectively and thus are considered as elements of the requirement to set rates to maintain the reserve ratio at the target DRR.
3As required by the Paperwork Reduction Act, staff applied for and received approval from the Office of Management and Budget to conduct a telephone survey of the largest institutions that have a 45-day deadline to submit their Call Reports.
4The rates modeled were the Fed funds rate and the rates on the 3-month Treasury bill, the 6-month Treasury bill, the 1-year Treasury bill, the 2-year Treasury note, the 5-year Treasury note, and the 10-year Treasury note.
5There are a few instances where the confidence bounds are truncated at a lower bound of 0.25.
6The model is a regression model where the current growth rate in insured deposits is estimated as a linear function of the previous growth rate in insured deposits as well as the current and previous growth rates of total (insured and uninsured) deposits. The range (+0.8%, +7.1%) corresponds to a 95% confidence level. In other words, we can be sure with 95% confidence that the actual growth rate in insured deposits, over the year 2003, will lie within this range. The growth rate predicted by the model (thus, the most likely rate) is the midpoint of this range (3.9 % annual growth).
7Section 7(b)(2)(A) of the FDI Act (12 U.S.C. § 1817(b)(2)(A)).