FDIC Reserve Ratio and Bank Regulation: French Hill Questions Acting Chair

Tailoring Bank Regulations

• 💡 Tailoring regulations to an institution's size, complexity, and risk profile is a key principle supported by Vice Chairman Bowman.
• 🎯 Efforts are underway to review the current tailoring framework to ensure it aligns with the intent of Congress as outlined in S2155.
• 📈 The concept of indexing regulatory thresholds is being evaluated to account for growth in money supply and bank assets.

Exam Appeals and Clarity

• 📌 The importance of an independent exam appeals process for management teams and boards is highlighted, referencing the Regal Act of 1994.
• ✍️ Additional clarity from a statutory perspective on exam appeals would be beneficial, with encouragement for Congress to consider the Fair Exams Act.

FDIC Reserve Ratio and Deposit Insurance

• 📊 The reserve ratio for the Deposit Insurance Fund (DIF) is defined as the net worth of the DIF divided by insured deposits.
• ⚠️ The statutory minimum reserve ratio is set at 1.35%.
• 💰 If deposit insurance coverage amounts increase significantly, leading to a larger denominator, the FDIC would need to raise assessments to maintain the statutory minimum reserve ratio, assuming no other changes.
• 🧐 The question of whether the DIF could be put at risk if revenue is not collected to meet the minimum reserve ratio is complex and requires further discussion.