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Regulatory Topics Dodd Frank Act
- 1. Regulatory Topics: Dodd Frank Wall Street Reform & Consumer Protection Act Carol T. Adams, CTP Managing Principal
- 21. For More Information www.redknotresources.com Carol T. Adams, CTP Managing Principal [email_address]
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- OUR VULNERABLE FAULT LINES Tripped Up At The Finish Line: The Perils Of Unemployment After 50 America's Economic Policy After Japan Crisis New Bill Would Ban Discrimination Against The Jobless Nuclear Safety Debate Hits Stock Prices House Republicans Amplify Attacks On Elizabeth Warren, Consumer Protection Automakers Extend Factory Shutdowns In Japan CHART: When A College Education Doesn't Help The Obama Administration's Plan To Punish Banks Dollar Close To Lowest Value Since WWII Dennis Santiago CEO and Managing Director of IRA Posted: March 16, 2011 01:37 PM BIO Become a Fan Get Email Alerts Bloggers' Index FDIC Bank Assessments Change on April 1st As Dodd-Frank Comes to Banking Inspiring Greedy Typical Scary Outrageous Amazing Innovative Infuriating Read More: Bank Regulation , Banks , Dennis Santiago , Dodd-Frank Act , Fdic , Institutional Risk Analytics , Business News share this story 1 35 1 1 Get Business Alerts Sign Up Submit this story digg reddit stumble The Federal Deposit Insurance Corporation (FDIC) is the buck stops here office of U.S. bank regulation. Chairman Sheila Bair and company are the checkbook behind the sign on every bank's door sign guaranteeing that your deposit is FDIC insured. Funding America's Deposit Insurance Fund (DIF) is done by charging banks an insurance premium. It's this cash paid by the banks themselves that is supposed to maintain the DIF's reserve. Come April 1st the rules for how banks get charged will be changing dramatically. The FDIC approved 2011 Final Rule changes to 12 CFR 327. The rule is effective April 1, 2011, and will be reflected in the June 30, 2011 fund balance and the invoices for assessments due September 30, 2011. The final rule incorporates many policy changes based on the intent of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The most important change of all is in something called the "base assessment amount". In the past this number was -- and until March 30th is -- the domestic deposits held by a bank. But as Dodd-Frank recognizes, banks have become more complex and leveraged. Most importantly, since the demise of Glass-Steagal, many of the larger institutions have incorporated the complexities of investment banking into their business models. The FDIC assessment methodology essentially gave a free ride to these aspects of a bank's operations. Well come April Fool's Day, the free ride is over. The "base assessment amount" changes to a new formula. From now on it's the bank's total assets minus its tangible common equity (TCE) that determines the base amount