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

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Author Info

  • 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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economics and Business.

Volume (Year): 64 (2012)
Issue (Month): 1 ()
Pages: 24-36

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Handle: RePEc:eee:jebusi:v:64:y:2012:i:1:p:24-36

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Web page: http://www.elsevier.com/locate/jeconbus

Related research

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;

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References

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  1. Robert A. Eisenbeis & Larry D. Wall, 2002. "Reforming deposit insurance and FDICIA," Economic Review, Federal Reserve Bank of Atlanta, issue Q1, pages 1-16.
  2. Pietro Veronesi & Luigi Zingales, 2009. "Paulson's Gift," NBER Working Papers 15458, National Bureau of Economic Research, Inc.
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Cited by:
  1. 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.

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