Another Dodd-Frank Tax on Size: The Fed Charges for Big-Bank Supervision

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An obscure section of the Dodd-Frank Act has been implemented by the Federal Reserve, to be effective later this year. Traditionally the Federal Reserve has not charged examination or similar fees for institutions under its supervision, but Congress determined that the largest institutions should be assessed an amount intended to reimburse the Federal Reserve for supervising them. This will likely impose an additional aggregate cost on the order of $400 to $500 million per year on these institutions, thereby further hiking up the price of size.

Section 318 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires that the Federal Reserve collect a total amount of assessments from the largest bank and thrift holding companies equal to the total expenses that it estimates are “necessary or appropriate” to carry out the Federal Reserve’s supervisory and regulatory responsibilities.1 The Federal Reserve adopted a final regulation on August 15, called Regulation TT, to be effective on October 25. The first notice of assessment is expected to be sent shortly after October 25 and will likely be payable by December 15. Thereafter, notices of assessment are scheduled to be sent by June 30 of each year and paid by September 15.

Please see full memo below for more information.

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