FDIC Issues Proposed Rule on Coronavirus Paycheck Protection Program

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On May 12, 2020, the FDIC Board of Directors published a notice of proposed rulemaking which purports to mitigate the “deposit insurance assessment effects of participating” in the Coronavirus-related Paycheck Protection Program (PPP) established by the U.S. Small Business Administration, and the PPP Lending Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF) established by the Federal Reserve.  Comments on the proposed rule are due by May 27, 2020. 

The FDIC asserts that without the proposed changes to the assessment rules, insured depository institutions that participate in the PPP, PPPLF, or MMLF programs “could be subject to increased deposit insurance assessments.”  Among other things, the proposed rule would:

  • Remove the effect of participation in the PPP and PPPLF on various risk measures used to calculate the assessment rate of an insured depository institution (IDI);
  • Remove the effect of participation in the PPPLF and MMLF programs on certain adjustments to an IDI’s assessment rate;
  • Provide an offset to an IDI’s assessment for the increase to its assessment base attributable to participation in the MMLF and PPPLF; and
  • Remove the effect of participation in the PPPLF and MMLF programs when classifying IDIs as small, large, or highly complex for assessment purposes.

The proposed effective date is June 30, 2020, and the proposed application date is April 1, 2020, which would insure that the changes would be applied to assessments starting in the second quarter of 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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