FDIC Proposes Rule to Facilitate Bank Participation in PPP, Money Market Facilities

Posted: May 13 2020

To help provide certainty to banks participating in the Paycheck Protection Program and its associated lending facility, as well as the Money Market Mutual Fund Liquidity Facility, the FDIC has proposed a rule to ensure that institutions would not be subject to increased deposit insurance assessments as a result of their participation.

Specifically, the proposal would remove the effect of participation in the PPP and PPPLF on various risk measures used to calculate a bank’s assessment rate and remove the effect of participation in the PPPLF and MMLF programs on certain adjustments to a bank's assessment rate. It would also provide an offset to a bank'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 insured depository institutions as small, large or highly complex for assessment purposes.

If finalized, the rule would take effect June 30, but have an application date of April 1, ensuring that the changes will be applied to assessments beginning in the second quarter of 2020. Comments on the proposed rule are due seven days after publication in the Federal Register.

To read the proposed rule visit: https://www.fdic.gov/news/board/2020/2020-05-12-notational-fr.pdf