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Report: FDIC Will Bill Big Banks to Replenish Insurance Fund

America’s banking giants are reportedly on the hook for replenishing the government deposit insurance fund.

The Federal Deposit Insurance Corp. (FDIC) is going to approve a proposal Thursday (Nov. 16) that will require the country’s biggest banks to refill the fund, which was used to help uninsured depositors during the March banking crisis, Bloomberg reported Thursday.

The FDIC will vote on the plan over objections from the banking industry, which had called for changes to the methodology used to calculate payments to refill the fund, per the report.

The FDIC said its plan would require banks with $50 billion or more in assets to pay 95% of the fees, while lenders with assets under $5 billion would be exempt. The government has said it aims to collect $15.8 billion in extra fees over two years.

The FDIC announced in May that The Deposit Insurance Fund had dipped from $128 billion to $116 billion following the back-to-back collapses of Silicon Valley Bank (SVB) and Signature Bank, which cost the government $20 billion.

Four banks would pay the bulk of the costs, per Bloomberg: J.P. Morgan Chase ($3 billion), Bank of America ($1.9 billion), Wells Fargo ($1.8 billion) and Citigroup ($1.5 billion).

The FDIC’s new rules come amid increased pressure on the banking sector following the crisis earlier this year, with the biggest banks now facing new capital requirements, despite the protests of their executives who argue it will hamper lending.

“We believe it really will have a material impact on the amount of lending that U.S. companies can do generally, which is not a good thing when the economy is more or less in a precarious position,” Citi Chairman John C. Dugan said last month. “Our largest banks, including Citi, are very strong from a safety and soundness perspective in terms of capital levels and liquidity levels.”

But while these requirements might be hard on bigger banks, they could be good for smaller lenders, PYMNTS wrote in June, pointing to comments by PSCU CEO Chuck Fagan that smaller financial institutions and credit unions were already poised, with the help of data and personalized relationships, to capture deposits.

Deposits can in turn be lent out as loans and may do much to give some competitive firepower as small- to medium-sized businesses (SMBs) search for the financing they need as interest rates and inflation stay lofty, PYMNTS wrote in July.