stickyimage

C-Suite Wednesday –  FDIC to Mitigate the Deposit Insurance Assessment Effect of Participation in PPP

June 24, 2020

By Caity Witucki
Contributing Editor, C-Suite Wednesday

C-Suite Wednesday –  FDIC to Mitigate the Deposit Insurance Assessment Effect of Participation in PPP

On Monday, The FDIC approved a final rule to ensure banks will not be subject to significantly higher deposit insurance assessments for participating in the Paycheck Protection Program (PPP), the Paycheck Protection Program Liquidity Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF). 

“The final rule […] substantially mitigates the impact of PPP lending on banks’ assessments, including generally removing PPP loans from the assessment rate and providing an offset for increases in the assessment base attributable to PPP lending,” says FDIC Chairwoman Jelena McWilliams. “Banks have served as a source of strength throughout this recent period of economic turmoil, and the FDIC continues to fine-tune its rules and policies to enable them to do so.

In addition to removing the effect of participation in the PPP and PPPLF on various risk measures used to calculate the assessment rate of an insured depository institution (IDI), the final rule does the following:

  • Removes the effect of participation in the PPPLF and MMLF programs on certain adjustments to an IDI’s assessment rate;

  • Offsets an IDI’s assessment for the increase to its assessment base attributable to participation in the MMLF and PPPLF; and

  • Removes the effect of participation in the PPPLF and MMLF programs when classifying IDIs as small, large, or highly complex for assessment purposes.

The final rule is effective immediately upon publication in the Federal Register, with an application date of April 1, 2020, which ensures that the changes will be applied to assessments starting in the second quarter of 2020.

Source:
Final Rule
FDIC – Press Release
Statement by Chairman McWilliams

2 weeks ago by in . You can follow any responses to this entry through the | RSS feed. You can leave a response, or trackback from your own site.