The largest banks in the United States are getting ready to pay billions to the Federal Deposit Insurance Corporation to refill an insurance fund that is supporting the whole financial system.
The amount paid by JPMorgan is $3 billion, making it the biggest of the institutions involved. The FDIC suggested the establishment of these fees in May as part of its “special assessment” plan, which would establish a new system in which the costs of depositor insurance would be paid for by payments from big financial institutions.
To comply with the new rules, financial institutions with above $50 billion in assets will be responsible for paying 95% of the special assessment, while those with under $5 billion would be exempt from paying any of it.
Using the FDIC as an example, “This plan would target financial institutions that benefited the most from the shielding of uninsured depositors with a specific charge The systemic risk evaluation was especially helpful to big banks that had a lot of deposits that were not insured.”
With many smaller banks going out of business, the FDIC has taken action to ensure the stability of the American banking system. On July 28th, the FDIC reported that the Heartland Tri-State Bank in Elkhart, Kansas, had closed and its assets were transferred to the Kansas-based Dream First Bank, National Association (N.A.).
Despite a significant decrease in deposits, the largest US bank, JPMorgan, reported a 67% increase in quarterly earnings to $14.47 billion in the quarter ending June 30.
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