The Clearing House Association (TCH) filed a comment letter with the Federal Deposit Insurance Corporation (FDIC) on its proposed rule regarding changes to the deposit insurance assessment calculation methodology. In the letter, TCH reiterates its support for maintaining a robust federal deposit insurance fund (DIF), but expresses concern that the proposed rule is inconsistent with the statutory requirement that assessments be based on actual risk to the DIF. TCH also argues that adhering to the risk-based statutory mandate is essential for multiple reasons: it promotes the integrity of the DIF; it discourages excessive or undue risk-taking; it avoids subsidies; it is more fair; and it is consistent with the fundamental principles of insurance. TCH also provides a number of suggestions intended to make the changes to the assessment methodology more risk-based, including recommended changes that would: (i) permit the recognition of collateral in measuring counterparty exposure, consistent with the standardized approach adopted in the capital rules, (ii) more appropriately reflect treatment of exposures to certain kinds of CCPs, and (iii) retain the option to use an internal model methodology, which is arguably a much more risk-sensitive way to measure counterparty exposure.
You Might Also Be Interested In...
Bank Activities and Structure Financial Services Industry United in Opposition to Marshall-Durbin Credit Routing Legislation
Bank Activities and Structure The FDIC’s Proposed Increase in Deposit Insurance Assessments May Be Based On Incorrect Projections
Bank Activities and Structure Quality Patents Coalition Express Key Priorities for Patent Reform Legislation in Letter to Congress
Industrial Loan Company Bank, Credit Union and Consumer Groups Support Committee Vote to Close the Industrial Loan Company Loophole
More Posts by This Author
Digital Assets BPI Comments on Treasury Department Review of Digital Assets in Response to Executive Order
Community Reinvestment Act BPI Comments on Federal Banking Agencies’ Community Reinvestment Act Proposal
Bank Liquidity The Bank of England Just Released Its Plan for Getting Smaller. The Fed Could Learn from it.