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Moving FDIC insurance to an asset-based assessment system: Evidence from the special assessment of 2009

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  • Hein, Scott E.
  • Koch, Timothy W.
  • Nounamo, Chrislain

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.

Suggested Citation

  • Hein, Scott E. & Koch, Timothy W. & Nounamo, Chrislain, 2012. "Moving FDIC insurance to an asset-based assessment system: Evidence from the special assessment of 2009," Journal of Economics and Business, Elsevier, vol. 64(1), pages 24-36.
    • Handle: RePEc:eee:jebusi:v:64:y:2012:i:1:p:24-36
    DOI: 10.1016/j.jeconbus.2011.04.002
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    References listed on IDEAS

    as
    1. Robert A. Eisenbeis & Larry D. Wall, 2002. "Reforming deposit insurance and FDICIA," Economic Review, Federal Reserve Bank of Atlanta, vol. 87(Q1), pages 1-16.
    2. Veronesi, Pietro & Zingales, Luigi, 2010. "Paulson's gift," Journal of Financial Economics, Elsevier, vol. 97(3), pages 339-368, September.
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    Cited by:

    1. Kyle D. Allen & Travis R. Davidson & Scott E. Hein & Matthew D. Whitledge, 2018. "Dodd–Frank’s federal deposit insurance reform," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(4), pages 271-286, November.
    2. Lawrence L Kreicher & Robert N McCauley & Patrick McGuire, 2013. "The 2011 FDIC assessment on banks managed liabilities: interest rate and balance-sheet responses," BIS Working Papers 413, Bank for International Settlements.
    3. Kasztelnik Karina, 2020. "Innovative Empirical Model for Predicting National Banks’ Financial Failure with Artificial Intelligence Subset Data Analysis in the United States," Open Economics, De Gruyter, vol. 3(1), pages 98-111, January.

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    More about this item

    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;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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