America’s biggest banks are facing a $15.8 billion bill for the recent banking crisis.
That’s according to the Federal Deposit Insurance Corporation (FDIC), which announced in a Thursday (May 11) press release that it plans to extract that amount in extra fees over two years to recoup its losses after the rescues of Silicon Valley Bank and Signature Bank.
The FDIC said in the release that 113 banks would pay this “special assessment,” with those that have at least $50 billion in assets covering 95% of the cost.
“In implementing the special assessment, the law requires the FDIC to consider the types of entities that benefit from any action taken or assistance provided as well as economic conditions, the effects on the industry, and other factors deemed appropriate and relevant,” FDIC Chairman Martin Gruenberg said in a separate statement. “In general, large banks with large amounts of uninsured deposits benefitted the most…”
The assessment covers banking giants like J.P. Morgan — the largest bank in America — and regional banks like SVB and Signature. Banks with less than $5 billion in assets are exempt from the assessment, the FDIC said in the release.
The FDIC said in the release it wants to collect the special assessment at an annual rate of approximately 12.5 basis points over eight quarters, starting in early 2024.
The regulator’s announcement came on the same day as comments from J.P. Morgan CEO Jamie Dimon on the ongoing effects of the crisis.
“We need to finish the bank crisis,” Dimon said in an interview with Bloomberg TV. “Whatever the FDIC, the OCC, the Fed — whatever they need to do to make it better they should do.”
Dimon also projected harsher times ahead for his industry.
“I think it’s going to get worse for banks — more regulations, more rules and more requirements,” he said. “If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers.”
The FDIC was criticized earlier this month by House Financial Services Committee Chairman Patrick McHenry over its response to the failure of First Republic Bank.
McHenry said he appreciated the “quick work” of the FDIC in selling the bank’s assets to J.P. Morgan “while minimizing risk to taxpayers.”
“The question remains, why didn’t the FDIC do the same thing in March when SVB was placed into receivership,” McHenry added, referring to SVB. “It’s critical that the [President Joe] Biden administration and its regulators not politicize these events.”