The Board of Directors of the Federal Deposit Insurance Corporation, or FDIC  approved on November 9, 2010, two proposed rules that would amend the deposit insurance assessment regulations.  The first would implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that changes the assessment base from one based on domestic deposits (as it has been since 1935) to one based on assets. The second proposal would re-propose changes for the deposit insurance assessment system for large institutions given Dodd-Frank’s changes to the assessment base. This proposal replaces a proposed rule approved by the Board in April.

 In accordance with a provision in Dodd-Frank, the FDIC is proposing to change the assessment base from adjusted domestic deposits to average consolidated total assets minus average tangible equity.

 Since the new base would be much larger than the current base, the FDIC is also proposing to lower assessment rates, which achieves the FDIC’s goal of not significantly altering the total amount of revenue collected from the industry.

 The second assessment-related item replaces a proposed rule revising the deposit insurance assessment system for large institutions that was approved by the FDIC on April 13, 2010. The proposal approved today by the Board would eliminate risk categories and debt ratings from the assessment calculation for large banks and would instead use scorecards. The scorecards would include financial measures that are predictive of long-term performance. A large financial institution would continue to be defined as an insured depository institution with at least $10 billion in assets.

 Both proposals will have a 45-day comment period upon publication in the Federal Register. The FDIC is also proposing that both changes in the assessment system be effective as of April 1, 2011.

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