On December 7, the FDIC released its semiannual update on the Restoration Plan for the agency’s Deposit Insurance Fund (DIF). The Federal Deposit Insurance Act (the FDI Act) requires that the FDIC board adopt a Restoration Plan wherein the DIF balance falls below the statutory minimum reserve ratio by the required deadline. The FDIC detailed that after the first half of 2020 and the onset of Covid-19, insured deposit growth caused a steep decline in the reserve ratio—the ratio of the fund balance relative to insured deposit—so the FDIC initiated the Restoration Plan in September 2020 to restore the DIF reserve ratio to 1.35 percent by the anticipated deadline. In 2022, however, the FDIC revised the plan after recognizing the risk of not meeting the required minimum by the deadline. The Amended Restoration Plan (covered by InfoBytes here) raised deposit insurance assessment rates by two basis points for all insured depository institutions, effective from the first quarterly assessment period of 2023.

The FDIC reported that as of June 30, the DIF balance was $117 billion, and the reserve ratio decreased from 1.25 percent to 1.1 percent due to increased loss provisions, which is on track to meet the statutory threshold ahead of the September 30, 2028, deadline.