Larger, riskier banks face higher deposit insurance premiums – Chopra

As US banks face the specter of a special assessment and higher deposit insurance premiums, one regulator believes the largest and riskiest institutions should be forced to pay more in light of recent bank failures.

Consumer Financial Protection Bureau Director and FDIC board member Rohit Chopra said certain companies should pay a larger share of a coming special assessment.

"I think it's clear that there are a set of institutions that have benefited more than others," Chopra said. "And I think we should make sure we fairly allocate those."

At the start of 2022, the FDIC raised the deposit insurance premium to help restore the Deposit Insurance Fund (DIF) reserve ratio to 1.35% by the end of September 2028. During an April 18 FDIC board meeting, Chopra suggested that another hike could be coming.

"Some of the larger institutions who do pose more risk to the fund will pay more, and certain smaller institutions will pay less," Chopra said.

The FDIC took emergency action to cover both insured and uninsured deposits following the collapse of Silicon Valley Bank and Signature Bank, costing the agency $22.5 billion. Silicon Valley Bank and Signature Bank had some of the highest rates of uninsured deposits in the country at the time they failed.

By law, the FDIC must charge special assessments to make up the cost of uninsured deposits. Chairman Martin Gruenberg said the FDIC will address the special assessment issue in May and do so with a notice and comment period.

At a Capitol Hill hearing in March, Gruenberg said his agency is "keenly sensitive" to the concerns of smaller financial institutions on any new payments and will take those into account when determining a plan. Industry experts told S&P Global Market Intelligence following the hearing that the nation's smallest banks are unlikely to bear the brunt of these assessments.

During the April 18 meeting, Gruenberg added that the recent bank failures should not prevent the FDIC from boosting the DIF reserve ratio to its desired goal on time.