Proposed Assessment Rate Adjustment Guidelines for Large and Highly Complex Institutions: FDIC Proposes New Assessment Rate Adjustment Guidelines for Large and Highly Complex Institutions in connection with its Final Rule on Assessment and Large Bank Assessment Pricing

Sullivan & Cromwell LLP - April 29, 2011
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On February 7, 2011, the Federal Deposit Insurance Corporation (the “FDIC”) issued a final rule adopting a new methodology for determining deposit insurance assessment rates for large and highly complex institutions (the “New Assessment System”). The New Assessment System introduced a scorecard method to calculate assessment rates and provided the FDIC with discretionary authority to adjust an institution’s total score. The final rule also required the FDIC to publish new guidelines before using this discretionary authority.

On April 12, 2011, the FDIC proposed for comment new guidelines relating to the deposit insurance assessment rate adjustment for large and highly complex institutions (the “Guidelines”). 76 Fed. Reg. 21,256 (April 15, 2011). The proposed Guidelines describe the process the FDIC would follow and the information it would consider to determine whether to make an adjustment and the size of the adjustment, and how the FDIC would provide notice to an institution of such adjustment. The FDIC would primarily consider two types of information in determining whether to make an adjustment and the size of the adjustment: (a) scorecard measure “outliers,” and (b) information not directly captured in the scorecard, including complementary risk measures and qualitative risk considerations. The proposed Guidelines when finalized would supersede the large bank pricing adjustment guidelines published by the FDIC on May 15, 2007, 72 Fed. Reg. 27,122 (the 2007 guidelines).

The FDIC seeks comment on all aspects of the proposed Guidelines, which must be received on or before May 31, 2011.