Moving FDIC Insurance to an Asset-Based System: Evidence from the Special Assessment of 2009

29 Pages Posted: 9 May 2011

See all articles by Scott E. Hein

Scott E. Hein

Texas Tech University

Timothy W. Koch

University of South Carolina - Darla Moore School of Business

Chrislain Nounamo

Texas Tech University

Date Written: March 19, 2011

Abstract

In the second quarter of 2009, the FDIC imposed a special assessment on insured banks to replenish the deposit insurance fund. While the traditional assessment base for regular deposit insurance premiums was all insured deposits, the special assessment was applied to a bank’s total assets minus Tier 1 capital (total liabilities), with the maximum ‘capped’ at 10 basis points of insured deposits. We find that the cap yielded the greatest savings for banks with assets above $10 billion and that the FDIC would have raised a substantially greater amount of funds using holding company adjusted assets or could have applied a lower assessment rate to collect the same amount of proceeds.

Keywords: Financial Crisis, Federal Deposit Insurance Corporation, Deposit Insurance Assessment Base, Special Assessment, Supervisory Capital Assessment Program, Stress Test, Too Big to Fail, Community Banks, Deposit Insurance Fund (DIF), Bank Subsidiaries

JEL Classification: G2, G21, G28

Suggested Citation

Hein, Scott E. and Koch, Timothy W. and Nounamo, Chrislain, Moving FDIC Insurance to an Asset-Based System: Evidence from the Special Assessment of 2009 (March 19, 2011). Available at SSRN: https://ssrn.com/abstract=1832843 or http://dx.doi.org/10.2139/ssrn.1832843

Scott E. Hein (Contact Author)

Texas Tech University ( email )

PO Box 42101
Lubbock, TX TX 79409
United States

Timothy W. Koch

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Chrislain Nounamo

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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