October 22, 2015
Comptroller of the Currency Statement Implementing Dodd-Frank Act Requirement to Increase Bank Reserve Ratio
WASHINGTON — Comptroller of the Currency Thomas J. Curry made the following statement at a board meeting of the Federal Deposit Insurance Corporation (FDIC) on his vote to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requirement to increase the FDIC bank reserve ratio from 1.15 percent to 1.35 percent.
Having served on this board for almost 12 years before, during, and now after the financial crisis, I am pleased to learn that the deposit insurance ratio is poised to achieve the 1.15 percent level earlier then estimated.
In considering the options to meet the Dodd-Frank Act statutory mandate of 1.35 percent, I believe the surcharge approach is the best option. Under the proposed approach, the Deposit Insurance Fund will likely reach 1.35 percent by 2018, well before the statutory requirement of September 30, 2020. While it is difficult to predict the future, achieving this goal by 2018 also strengthens the Deposit Insurance Fund sooner rather than later, and is more likely to avoid achieving it in a countercyclical manner. The proposed surcharge would come at a time when the banking industry is experiencing improved health and as a result is in a better position to afford it without significant impact to earnings, capital, and liquidity. It is important to note that the proposed surcharge is a quarterly expense, just as the regular quarterly assessment is treated.
The proposal is also sensitive to community banks under $10 billion in total assets by providing an assessment credit for use in the future for their portion of their regular assessment that contributes to raising the ratio from 1.15 percent to 1.35 percent.
I support the proposal to increase the reserve ratio from 1.15 percent to 1.35 percent, and I look forward to reviewing the comments from interested parties.