Statement by Chairman Travis Hill on the Proposal to Revise Assessments

Earlier this month, I spoke about the FDIC's plans to make adjustments to our assessments framework.¹ Today's proposal is the first step in that process. Specifically, the proposal would:

• Raise the threshold that determines which banks are subject to the large bank scorecard, to ensure the threshold appropriately reflects the risk profile of institutions for which the large bank scorecard is intended;
• Reduce assessments for all institutions, reflecting the progress the FDIC has made in building up the Deposit Insurance Fund (DIF) since crossing the statutory minimum reserve ratio; and
• Incorporate a "resolution readiness adjustment" (RRA) into the large bank framework that enables large banks to reduce assessments by opting in to one or both of two components.

The RRA's first component would be available for banks that can demonstrate an ability to quickly populate a virtual data room (VDR). When Silicon Valley Bank failed, the bank was unable to quickly populate a VDR with accurate and complete information, which impeded the ability of potential bidders to conduct due diligence. The inability to quickly provide quality information can result in worse bids and/or a longer process, which ultimately increases cost to the DIF. The second component would be available for banks that elect to provide the FDIC with temporary access to data from certain service providers and/or internal systems. This would allow the FDIC to better understand the institution's key IT platforms and enable the FDIC to quickly plug in to the relevant systems upon failure to extract necessary information and data. Banks that successfully opt in to the RRA are expected to cost the FDIC less upon failure, thus justifying a downward adjustment to premiums.

Thank you to the staff for the work on this proposal, and I look forward to comments.