FDIC Financial Institution Letter Announces Proposed Rulemaking to Mitigate Deposit Insurance Assessment Effects in the PPP and Other Programs

The FDIC authorized publication of a proposed rule that would mitigate the deposit insurance assessment effects on lenders participating in the Paycheck Protection Program (PPP), the Paycheck Protection Program Lending Facility (PPPLF) and the Money Market Mutual Fund Liquidity Facility (MMLF). Without change, an insured depository institution (IDI) that participates in these programs could be subject to increased deposit insurance assessments.

Specifically, the proposed rule would (i) remove the effect of participation in the PPP and PPPLF on various risk measures used to calculate the assessment rate on an IDI (ii) remove the effect of participation in the PPPLF and MMLF programs on certain adjustments to such rate, (iii) provide an offset to an IDI’s assessment for the increase to its assessment base attributable to participation in the MMLF and PPPLF and (iv) remove the effect of participation in the PPPLF and MMLF programs when classifying IDIs as small, large, or highly complex for assessment purposes.

To provide certainty regarding the assessment effects of participating in these programs, the proposed effective date is June 30, 2020, and the proposed application date is April 1, 2020.  Comments on the proposed rule will be accepted for seven days after its publication in the Federal Register.