The largest U.S. banks are footing the bill on replenishing the deposit insurance fund that was exhausted by the collapse of three regional banks within a month.
According to a Reuters report, the Federal Deposit Insurance Corp. (FDIC) has introduced a new a “special assessment” fee of 0.125% to uninsured deposits of lenders in excess of $5 billion. Although the fee is supposed to cover all U.S. banks, in reality lenders with more than $50 billion in assets will wind up covering over 95% of the cost while banks with less than $5 billion in assets would need carry any fee burden.
Around 113 banks are expected to pay the fee, which will be collected over eight quarters beginning in June 2024. The fee could be adjusted if there are changes in the estimated losses to the insurance fund.
FDIC Chairman Martin Gruenberg defended the fee’s targeting of the major lenders by stating, “In general, large banks with large amounts of uninsured deposits benefited the most from the systemic risk determination.”
Did I miss it? Why didn’t government say anything specifically before about FDIC funds being nearly depleted?
Well, the government, in Jamie Dimon’s words, “invited” Chase and Others to participate in the management of some of the failed regional banks, Chase acquired some of those assets and assumed some of the liabilities.
The bigger questions are:
Should the “Government” be controlling which banks prosper?
How could, and why would, one huge bank working hand & glove with the government provide the best products /services to the general public?
How does a lack of competition in the banking industry affect the general public?
It’s all transitory!🤣. We’ll know exactly what that means when the banking system collapses!