The Federal Deposit Insurance Corporation is reportedly mulling a plan to force the nation’s largest banks to foot the $23 billion bill it incurred for backstopping depositors who put money in accounts at failed regional lenders.
The FDIC is preparing a “special assessment” in May that will be aimed at safeguarding a $128 billion deposit insurance fund that was raided to cover deposits at collapsed lenders Silicon Valley Bank and Signature Bank of New York, according to Bloomberg News.
The FDIC’s deposit insurance fund is maintained by assessments, or insurance premiums, that are charged to banks on a quarterly basis, according to the agency’s web site.
FDIC officials are said to be discussing hiking the insurance premiums that are paid by the larger banks, including JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup, which already pay billions of dollars into the fund.
Bloomberg cited sources familiar with the discussions as saying that forcing big banks to pay more is the “most politically palatable solution.”
An FDIC spokesperson referred The Post to comments made by the agency’s chairman, Martin Gruenberg, who told lawmakers this week that “the FDIC will issue in May 2023 a proposed rulemaking for the special assessment for public comment.”
Following the collapse of Silicon Valley Bank and Signature Bank of New York, Biden administration officials stepped in and announced that all depositors — including those with more than the FDIC threshold of $250,000 in their accounts — would be insured.
The Biden administration has pledged that taxpayers would not bear the direct cost for the failure of the two banks.
But other banks may have to help defray the cost of covering uninsured deposits.
Over time, those banks could pass higher costs on to customers, forcing everyone to pay more for services.
The FDIC has said that it expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion.
JPMorgan Chase and 10 of the nation’s largest banks pooled together a $30 billion emergency investment in First Republic Bank, the San Francisco-based lender whose shaky balance sheet has observers nervous about its financial stability.
The declining confidence in smaller, regional lenders has prompted panicked depositors to park their money into large banks.
According to a Moody’s report cited by Bloomberg News, customers deposited a total of $120 billion into large banks while smaller lenders lost $109 billion in the weeks since Silicon Valley Bank and Signature Bank of New York imploded.
Silicon Valley Bank’s collapse, which primarily affected tech firms, cost the FDIC an estimated $20 billion.
Republicans on Capitol Hill expressed concern that the backstop amounted to a bailout of failed lenders who made risky investments — with the bill for their failure being passed on to ordinary consumers in the form of additional banking fees.
Banks in rural Oklahoma “are about to pay a special fee to be able to bail out millionaires in San Francisco,” Sen. James Lankford (R-Ok.) said on the Senate floor earlier this month.
The Post has sought comment from JPMorgan Chase.
Wells Fargo, Citigroup, and Bank of America have declined to comment.
With Post wires
[Written in collaboration with other media outlets with information from the following sources]
