Joint Trades Supplementary Comment on Assessments, Revised Deposit Insurance Assessment Rates

To whom it may concern,

The undersigned Associations are submitting this letter to supplement comments submitted to the Federal Deposit Insurance Corporation on August 19, 2022 regarding the notice of proposed rulemaking to increase initial base deposit insurance assessment rates by 2 basis points until the Deposit Insurance Fund (DIF) achieves the FDIC’s long-term goal of achieving a Designated Reserve Ratio of 2 percent of insured deposits. We appreciate Acting Chairman Gruenberg’s recent statements that “[t]he FDIC continues to incorporate recent data into its projections of the reserve ratio” and that the FDIC “will carefully consider all comments received.”

As part of this effort to ensure the FDIC’s projections of the reserve ratio are accurate, we urge the FDIC to use the most recent industry data to inform the agency’s decision regarding deposit insurance assessment rates. Data published in the FDIC’s Quarterly Banking Profile (QBP) for the second quarter of 2022 was made available to the public after the submission of our previous letter, and after the close of the public comment period. Importantly, this data supports and confirms that an assessment rate increase is unwarranted at this time. In fact, the data shows that such an increase not only would be unnecessary to ensure the FDIC meets its statutory requirement to return the ratio to 1.35 percent by September 15, 2028, but also could be procyclical and reduce access to credit for consumers and businesses at a time when financial conditions are tightening considerably—exactly when access to credit matters most. In light of this, a rate increase in pursuit of the 2 percent Designated Reserve Ratio target, which, as discussed in our previous letter, is not statutorily mandated and is calibrated based on outdated analysis, would be imprudent. The most recent data makes the case against an imminent increase to deposit insurance assessment rates even more compelling and we encourage the FDIC not to implement one at this time.

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