[Federal Register Volume 60, Number 32 (Thursday, February 16, 1995)]
[Proposed Rules]
[Pages 9266-9270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3669]




[[Page 9265]]

_______________________________________________________________________

Part VII





Federal Deposit Insurance Corporation





_______________________________________________________________________



12 CFR Part 327



Assessments; Retention of Existing Rate Schedule for SAIF Member 
Institutions and New Rate Schedule for BIF Member Institutions; 
Proposed Rules

  Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / 
Proposed Rules  

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 327

RIN--3064-AB59


Assessments; Retention of Existing Assessment Rate Schedule for 
SAIF Member Institutions

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: Based upon the results of its semiannual review of the 
recapitalization of the Savings Association Insurance Fund (SAIF) and 
of the SAIF assessment rates, the Board of Directors of the FDIC 
(Board) proposes to retain the existing assessment rate schedule 
applicable to SAIF-member institutions. The effect of this proposal 
would be that the SAIF assessment rate to be paid by SAIF members would 
continue to range from 23 cents per $100 of domestic deposits to 31 
cents per $100 of domestic deposits, depending on risk classification. 
Through this proposed rulemaking, the FDIC is soliciting comments on 
all aspects of its proposal to retain the existing assessment rate 
schedule applicable to SAIF-member institutions.

DATES: Written comments must be received by the FDIC on or before April 
17, 1995.

ADDRESSES: Written comments shall be addressed to the Office of the 
Executive Secretary, Federal Deposit Insurance Corporation, 550 17th 
Street, N.W., Washington, D.C. 20429. Comments may be hand-delivered to 
Room F-400, 1776 F Street, N.W., Washington, D.C., on business days 
between 8:30 a.m. and 5:00 p.m. (FAX number: 202/898-3838). Comments 
will be available for inspection in Room 7118, 550 17th Street, N.W., 
Washington, D.C. between 9:00 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: James R. McFadyen, Senior Financial 
Analyst, Division of Research and Statistics (202/898-7027), Federal 
Deposit Insurance Corporation, Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Background: SAIF Assessment Rates

    Section 7(b) of the Federal Deposit Insurance Act (FDI Act) (12 
U.S.C. 1817(b)) requires that, if the SAIF reserve ratio is below the 
designated reserve ratio of 1.25 percent, the FDIC shall set 
assessments to increase the reserve ratio to the designated reserve 
ratio.\1\ Section 7(b) of the FDI Act also requires a minimum SAIF 
assessment that is at least as much as would be raised by an average 
assessment rate of 18 basis points. The minimum assessment requirement 
is in effect as long as the SAIF is not fully capitalized or has 
outstanding borrowings under section 14 of the FDI Act. If either of 
these two conditions exists as of January 1, 1998, the minimum 
assessment requirement increases to a rate of 23 basis points. 
[[Page 9266]] 

    \1\Currently, there is no recapitalization schedule for the SAIF 
mandated by statute. However, as of January 1, 1998, the Board is 
required to promulgate a recapitalization schedule that achieves the 
designated reserve ratio within 15 years, except that the Board may 
extend the recapitalization date to one which ``will, over time, 
maximize the amount of semiannual assessments received by the SAIF, 
net of insurance losses incurred by the Fund''.
---------------------------------------------------------------------------

    In order to achieve SAIF recapitalization, the FDIC Board of 
Directors (Board) adopted a risk-related assessment matrix in September 
1992 (see Table 1) which has remained unchanged. Previously, in 
deciding against changes in the SAIF assessment rate, the Board has 
considered the SAIF's expected operating expenses, case resolution 
expenditures and income under a range of scenarios. The Board also has 
considered the effect of an increase in the assessment rate on SAIF 
members' earnings and capital. When first adopted, the assessment rate 
schedule yielded a weighted average rate of 25.9 basis points. With 
subsequent improvements in the industry and the migration of 
institutions to lower rates within the assessment matrix, the average 
rate has declined to 24 basis points (based on risk-based assessment 
categories as of January 1, 1995 and the assessment base as of 
September 30, 1994--see Table 2).

 Table 1.--SAIF-Member Assessment Rate Schedule For the First Semiannual
                        Assessment Period of 1995                       
                             [Basis points]                             
------------------------------------------------------------------------
                                                         Supervisory    
                                                           subgroup     
                   Capital group                    --------------------
                                                       A      B      C  
------------------------------------------------------------------------
Well capitalized...................................     23     26     29
Adequately capitalized.............................     26     29     30
Undercapitalized...................................     29     30     31
------------------------------------------------------------------------


                  Table 2.--SAIF-Member Assessment Rate Distribution As of September 30, 1994*                  
                                              [Billions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
                                                                            Supervisory subgroup                
                                                           -----------------------------------------------------
         Capital group                                              A                 B                 C       
                                                           -----------------------------------------------------
                                                             Amount  Percent   Amount  Percent   Amount  Percent
----------------------------------------------------------------------------------------------------------------
    Well capitalized...........  Number...................    1,585     85.6      139      7.5       35      1.9
                                 Assets...................   $526.5     70.7   $109.9     14.8    $20.4      2.7
                                 Base.....................    386.6     72.3     74.5     13.9     15.3      2.9
    Adequately capitalized.....  Number...................       28      1.5       34      1.8       21      1.1
                                 Assets...................    $25.5      3.4    $22.0      3.0    $32.9      4.4
                                 Base.....................     15.7      2.9     15.9      3.0     21.5      4.0
    Under capitalized..........  Number...................        0      0.0        0      0.0       10      0.5
                                 Assets...................     $0.0      0.0     $0.0      0.0     $7.4      1.0
                                 Base.....................      0.0      0.0      0.0      0.0      5.7      1.1
----------------------------------------------------------------------------------------------------------------
*``Base'' is the amount of deposits subject to SAIF assessments.                                                

    The primary source of funds for the SAIF is assessment revenue from 
SAIF-member institutions. Since the creation of the fund and through 
the end of 1992, however, all assessments from SAIF-member institutions 
were diverted to other needs as required by the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (FIRREA).2 Only 
assessment revenue generated from Bank Insurance Fund (BIF) member 
institutions that acquired SAIF-insured deposits under section 5(d)(3) 
of the FDI Act (12 U.S.C. 1815(d)(3)) (so-called ``Oakar'' banks) was 
deposited in the SAIF throughout this period. [[Page 9267]] 

    \2\From 1989 through 1992, more than 90 percent of SAIF 
assessment revenue went to the FSLIC Resolution Fund (FRF), the 
Resolution Funding Corporation (REFCORP) and the Financing 
Corporation (FICO).
---------------------------------------------------------------------------

    SAIF-member assessment revenue began flowing into the SAIF on 
January 1, 1993. However, the Financing Corporation (FICO) has a 
priority claim on SAIF-member assessments in order to service FICO bond 
obligations. Under existing statutory provisions, FICO has assessment 
authority through 2019, the maturity year of its last bond issuance. At 
approximately $779 million per year, the FICO draw is substantial, 
representing nearly 45 percent of estimated assessment revenue for 
1995, or 11 basis points of the average assessment rate of 24 basis 
points. The SAIF had a balance of $1.8 billion (unaudited) on December 
31, 1994. With primary resolution responsibility residing with the 
Resolution Trust Corporation (RTC), there have been few demands on the 
SAIF, but the authority of the RTC to place failed thrifts in 
conservatorship or establish receiverships expires June 30, 1995.
    In addition to assessment revenues and investment income, there are 
at least two other potential sources of funds for the SAIF. First, the 
FDIC has a $30 billion line of credit available with the Department of 
the Treasury (Treasury) for deposit insurance purposes, although the 
SAIF has required no extension of credit. Second, the Resolution Trust 
Corporation Completion Act (RTCCA) authorized the appropriation of up 
to $8 billion in Treasury funds to pay for losses incurred by the SAIF 
during fiscal years 1994 through 1998, to the extent of the 
availability of appropriated funds and provided that certain 
certifications are made to the Congress by the Chairman of the FDIC. 
Among these, the Chairman must certify that the FDIC Board has 
determined that:

    (1) SAIF members are unable to pay additional semiannual 
assessments at the rates required to cover losses and to meet the 
repayment schedule for any amount borrowed from the Treasury for 
insurance purposes under the FDIC's line of credit without adversely 
affecting the SAIF members' ability to raise capital or to maintain 
the assessment base; and
    (2) An increase in assessment rates for SAIF members to cover 
losses or meet any repayment schedule could reasonably be expected 
to result in greater losses to the Government.

    The RTC's resolution activities and the thrift industry's 
substantial reduction of troubled assets in recent years have resulted 
in a relatively sound industry as the July 1, 1995 date for SAIF 
resolution responsibility approaches. However, with a balance of $1.8 
billion beginning 1995, the SAIF does not have a large cushion with 
which to absorb the costs of thrift failures. The FDIC has 
significantly reduced its projections of failed-thrift assets for 1995 
and 1996, but the failure of a single large institution or an economic 
downturn leading to higher than anticipated losses could render the 
fund insolvent.
    Furthermore, there may soon be a substantial differential between 
BIF and SAIF premiums. The BIF is expected to be recapitalized during 
1995, at which time BIF premiums can be reduced far below current 
levels. Largely due to the FICO obligation, the SAIF is not likely to 
be recapitalized until 2002 (this projection is discussed below in 
section III). A premium differential may have adverse consequences for 
SAIF members, including reduced earnings and an impaired ability to 
raise funds in the capital markets. Among the weakest thrifts, this 
differential could result in competitive pressures that would lead to 
additional failures. An analysis over a five year time span suggests 
that any such increase in failures is likely to be sufficiently small 
as to be manageable by the SAIF under current interest-rate and asset 
quality conditions. Moreover, the analysis indicates that under harsher 
interest-rate and asset-quality assumptions, these economic factors 
would have a significantly greater effect on SAIF-member failure rates 
than would a premium differential.
    While the premium differential is not expected to lead to 
significant failures in the near term, it may lead to other adverse 
results. A premium differential would also create a powerful incentive 
for SAIF-insured institutions to minimize premium costs by shrinking 
the base against which assessments are levied (currently domestic 
deposits). This can be accomplished, despite the moratorium on 
conversions of SAIF-insured deposits to BIF-insured deposits at these 
institutions, by substituting nondeposit liabilities for SAIF-insured 
deposits. These nondeposit liabilities are readily available and 
include Federal Home Loan Bank (FHLB) advances and reverse repurchase 
agreements. The net result could be an acceleration of the shrinkage of 
the assessment base, thereby reducing assessment revenue. This could 
threaten the ability to service the FICO obligation sometime near or 
after the year 2000 and, over the longer term, frustrate the 
capitalization of the SAIF. As shown in the following table, the 
assessment base has been declining steadily since the fund was 
established in 1989, although the decline was at a slower rate in 1994.

                              Table 3.--SAIF Assessment Base and Insured Deposits*                              
                                          [Dollar amounts in billions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                               Est. Insured                     
                                       Assessment base     Percent change        deposits        Percent change 
----------------------------------------------------------------------------------------------------------------
    1989............................             $950.3                                $882.9                6.0
    1990............................              877.7               -7.6              830.0               -6.0
    1991............................              820.2               -6.5              776.4               -6.5
    1992............................              760.5               -7.3              729.5               -6.0
    1993............................              729.4               -4.1              695.6               -4.6
    1994............................              716.3               -1.8              687.3               -1.2
----------------------------------------------------------------------------------------------------------------
*Includes conservatorships and Sasser institutions; adjusted for Oakar deposits. End-of-period domestic deposits
  are used to approximate the SAIF assessment base. The actual assessment base may be slightly less than        
  domestic deposits due to float adjustments, but period-to-period changes should be similar. Table 3 presents  
  end-of-period figures (the comparable table in earlier proposals used averages) to reflect the quarterly      
  billing system which becomes effective the second quarter of 1995.                                            

     [[Page 9268]] The FDIC's Legal Division has opined that SAIF 
assessments paid by BIF-member Oakar banks should remain in the SAIF 
and are not subject to FICO draws.3 Further, the Legal Division 
has opined that SAIF assessments paid by any former savings association 
that (i) has converted from a savings association charter to a bank 
charter, and (ii) remains a SAIF member in accordance with section 
5(d)(2)(G) of the FDI Act (12 U.S.C. 1815(d)(2)(G)) (a so-called 
``Sasser'' bank), are likewise not subject to draws by FICO.4 On 
September 30, 1994, BIF-member Oakar banks held 23.3 percent of the 
SAIF assessment base (see Table 4), and SAIF-member Sasser banks held 
an additional 6.9 percent. While the pace of Oakar acquisitions is 
likely to slow substantially as RTC resolution activity winds down in 
1995, Oakar deposits may continue to grow at the same rate as BIF-
member deposits and become a greater proportion of the SAIF assessment 
base.5 This has the potential result of SAIF's having insufficient 
assessments to cover the FICO obligation. The rate of Sasser 
conversions is difficult to predict and is partially dependent on state 
laws, but any future conversions would also decrease the proportion of 
SAIF assessment revenues available to FICO. These factors are 
considered in the projections of SAIF's recapitalization in section 
III.

    \3\See Notice of FDIC General Counsel's Opinion No. 7, 60 FR 
7055 (Feb. 6, 1995).
    \4\Id.
    \5\Under section 5(d)(3) of the FDI Act, as amended by FDICIA, 
SAIF-insured deposits acquired by a BIF member are adjusted annually 
by the acquiring institution's overall deposit growth rate 
(excluding the effects of other mergers or acquisitions).

   Table 4.--SAIF-Insured Deposits Held by BIF-Member Oakar Banks as a  
                Percent of SAIF Member Domestic Deposits*               
------------------------------------------------------------------------
                          Year                                Percent   
------------------------------------------------------------------------
1991....................................................             7.5
1992....................................................             9.7
1993....................................................            18.4
9/94....................................................           23.3 
------------------------------------------------------------------------
*End-of-period figures; domestic deposits are adjusted for Oakar        
  deposits.                                                             

II. Condition and Performance of SAIF-Member Institutions

    SAIF-member institutions numbered 1,869 on September 30, 1994, 
including 1,794 thrift institutions and 75 commercial banks.6 
While the total number of institutions is down from year-end 1993, 
there is evidence of a growing industry. For the first three quarters 
of 1994, these institutions increased their total assets by $6.8 
billion (0.9 percent) based on loan growth of $6.3 billion. Total 
capital grew at an even faster pace for the nine months, raising the 
equity-to-assets ratio to 7.90 percent from 7.74 percent. The industry 
continued to pare troubled assets during 1994. Noncurrent loans and 
other real estate owned declined from 1.91 percent of total assets at 
the beginning of 1994 to 1.43 percent by September 30.

    \6\Excluding RTC conservatorships and one self-liquidating 
institution.
---------------------------------------------------------------------------

    The industry earned a return on assets of 0.62 percent for the 
first three quarters of 1994. While this is less than the ROA of 0.72 
percent earned in 1993, the earlier year included large one-time 
accounting gains. Also, some institutions incurred large restructuring 
charges in 1994 in order to dispose of troubled assets, which has 
positioned them for higher profits in subsequent periods. Earnings in 
1994 were hampered by smaller net interest margins, which fell from 
3.35 for all of 1993 to 3.24 for the first nine months of 1994. In the 
rising interest-rate environment, institutions' funding costs rose 
faster than asset yields, although institutions with higher proportions 
of adjustable-rate mortgages should be able to reprice a portion of 
these loans within six months.
    This discussion has focused on the improving condition of the SAIF-
member thrift industry, but any such discussion must mention the 
relatively weak economic conditions still confronting a large segment 
of the industry. Twenty-three percent of all SAIF member's total assets 
are concentrated in the nation's seven largest thrift institutions, all 
of which are headquartered in California. This state, in general, has 
lagged behind most of the nation in recovering from the most recent 
recession, and many California thrifts have significant exposure in the 
weakest areas of southern California. Additionally, a few large 
institutions have raised supervisory concerns due to low earnings and 
relatively high levels of risk in their loan portfolios. Consequently, 
despite the improving health of the thrift industry, the SAIF still 
faces significant risk relative to the fund's current reserve level.
    The current assessment rate schedule for SAIF-member institutions 
has a spread of 8 basis points from the lowest rate to the highest 
rate, dependent on supervisory factors and capitalization. A proposed 
assessment rate schedule for BIF-member institutions would increase the 
spread for BIF members from the current 8 basis points to 27 basis 
points. This would be accomplished by maintaining the current maximum 
rate of 31 basis points and dropping the minimum, most favorable rate 
to 4 basis points. Thus, the weakest BIF members would incur no 
additional deposit insurance cost. In order to apply a similar 27-basis 
point spread to SAIF members, it would be necessary to raise the 
highest SAIF assessment rate to 45 to 50 basis points (based on a 
lowest rate of 18 to 23 basis points). Because 85 percent of SAIF 
members would continue to pay the lowest rate, the revenue benefit of a 
27-basis point spread would be limited. However, a spread of that 
magnitude could have significant adverse consequences for the SAIF by 
greatly increasing expenses of its weakest members and, in all 
likelihood, causing additional failures.

III. New Projections for the SAIF

    In November 1994, the FDIC's interdivisional Bank and Thrift 
Failure Working Group (Working Group) estimated failed SAIF-insured 
institution assets at $3 billion for 1995 and $2 billion for 1996. The 
1995 estimate of $3 billion is based on the FDIC Division of 
Supervision's projected failure of specific institutions that likely 
would occur in the second half of the year, when SAIF assumes 
resolution responsibility from the RTC. The 1995 and 1996 estimates 
were used in updating the Division of Research and Statistics' 
projections of failed thrift assets, the fund balance and reserve 
ratios.
    The updated projection indicates the SAIF reserve ratio will reach 
1.25 percent in 2002, which is unchanged from the previous projection. 
Also, this projection indicates the fund will not encounter problems 
meeting the FICO obligation through 2012, the last year of the 
projection. The results are shown in Table 5.
    The following assumptions were used:
     Failed-institution assets are based on the Working Group's 
estimates for 1995 ($3 billion) and 1996 ($2 billion). Beyond 1996, the 
assumed failed-asset rate for SAIF will be 22 basis points, or about $2 
billion per year. This is lower than the historical loss rate for the 
BIF because of the thrift industry's current low level of problem 
assets.
     The nominal loss rate on failed thrift assets will be 13 
percent.
     The asset growth rate for SAIF members will be zero, based 
on the industry's recent experience.
     The SAIF assessment base will continue to shrink, at 2 
percent per year. Under current conditions, the assessment base for 
better capitalized thrifts is expected to be stable. Deposit shrinkage 
was more prevalent at weaker thrifts during periods when some better-
managed thrifts experienced deposit growth.7 However, the 
emergence of a BIF/SAIF premium differential may encourage less 
reliance on SAIF-assessable liabilities. The higher overall shrinkage 
rates of recent years are not expected to continue because a 
significant portion of the shrinkage was due to depositor flight from 
the declining or low deposit interest rates which prevailed from 1990 
to the latter part of 1994. Another portion of the shrinkage can be 
attributed to deposit runoff at conservatorships and weakened thrifts. 
[[Page 9269]] 

    \7\Deposit Flows at SAIF- and BIF-Insured Institutions: December 
1988 to September 1992, Policy Research Division, Office of Thrift 
Supervision, January 1993.
---------------------------------------------------------------------------

     The Oakar deposit purchase rate will be zero, but Oakar 
deposits will grow at 2 percent per year, the estimated growth rate for 
BIF-member deposits. Under FDICIA, Oakar deposits are adjusted annually 
by the acquiring institution's overall deposit growth rate. A 
significant portion of Oakar deposits were acquired from the RTC, and 
these opportunities have all but disappeared. The Riegle-Neal 
Interstate Banking and Branching Efficiency Act of 1994 authorizes a 
bank holding company to acquire out-of-state banks beginning September 
29, 1995, and authorizes a bank to establish de novo out-of-state 
branches beginning June 1, 1997 if the host state expressly permits 
interstate branching through the establishment of de novo branches. 
Thus, banks may no longer be confined to the acquisition of failed or 
failing charters to enter states previously closed to them.
     The average assessment rate will be 24 basis points until 
the SAIF is recapitalized, after which assessment rates are reduced to 
the level necessary to maintain the reserve ratio at 1.25 percent.

        Table 5.--SAIF Fund Balance and Reserve Ratio Projections       
------------------------------------------------------------------------
                   Fund balance ($ billions)        Reserve ratio*      
                 -------------------------------------------------------
    Year-end                                      9/94      1/95 current
                      9/94      1/95 current   Projection    projection 
                   Projection   projection**    (percent)     (percent) 
------------------------------------------------------------------------
    1994........          $2.2          $1.8         0.31          0.26 
    1995........           2.9           2.4         0.43          0.35 
    1996........           3.7           3.3         0.55          0.49 
    1997........           4.4           4.1         0.67          0.61 
    1998........           5.1           4.8         0.79          0.74 
    1999........           5.7           5.6         0.92          0.86 
    2000........           6.4           6.5         1.05          1.00 
    2001........           7.1           7.3         1.19          1.14 
    2002........           7.3           8.0         1.25          1.25 
    2003........           6.8           7.9         1.25          1.25 
    2004........           7.0           7.8         1.25          1.25 
    2005........           6.8           7.8         1.25          1.25 
    2006........           6.7           7.7         1.25          1.25 
    2007........           6.5           7.7         1.25          1.25 
    2008........           6.4           7.6         1.25          1.25 
    2009........           6.3           7.6         1.25          1.25 
    2010........           6.2           7.6         1.25          1.25 
    2011........           6.0           7.5         1.25          1.25 
    2012........           5.9           7.5         1.25          1.25 
------------------------------------------------------------------------
*After reaching 1.25 percent of insured deposits, the fund balance is   
  maintained at 1.25 percent of insured deposits.                       
**The estimated year-end 1994 fund balance is less than was shown for   
  September because of loss reserves set aside in the fourth quarter.   
  The 1/95 projected fund balance incorporates an Oakar deposit growth  
  factor, whereas the 9/94 projection did not.                          

    As stated earlier, the Board has the authority to reduce SAIF 
assessment rates to an average of 18 basis points until January 1, 
1998, at which time the average rate would rise to 23 basis points 
until recapitalization occurs. Projections made under this scenario 
(and using the same other assumptions as above) indicate that the SAIF 
would recapitalize in 2004, or two years later than under the existing 
rate schedule.

IV. FDIC Proposal Regarding SAIF-Member Assessment Rates

    Given the fund's relatively low balance and the imminent transfer 
of resolution authority from the RTC to the SAIF on July 1, the SAIF 
must be built as quickly as possible to its mandated reserve level. It 
is recognized that a differential between BIF and SAIF premiums could 
adversely affect some SAIF members, but the thrift industry has 
demonstrated its ability to generate additional capital and reduce 
troubled assets while paying deposit insurance premiums at the current 
levels. Also, a shrinking assessment base is producing declining 
revenue, which would be cut even further by lower assessment rates. The 
FDIC staff has recommended that assessment rates within the risk-
related assessment rate matrix remain at their current levels for the 
second semiannual assessment period of 1995. The Board believes that 
the minimum rate should not be reduced from the current 23 basis 
points, and that an increase in the current spread of 8 basis points 
from the lowest to the highest assessment rates would adversely impact 
weakened institutions already in danger of failure.

V. Summary

    Under the existing SAIF assessment rate schedule, which yields an 
average assessment rate of 24 basis points, the fund is projected to 
recapitalize in the year 2002, which is unchanged from prior 
projections. The Board has the authority to reduce SAIF assessment 
rates to 18 basis points until January 1, 1998, after which the average 
rate must remain at 23 basis points or higher until recapitalization is 
achieved. Reducing the average rate to 18 basis points is presently 
projected to delay SAIF recapitalization for two years, until 2004. 
Although the industry is relatively healthy, FDIC staff has recommended 
[[Page 9270]] that the Board retain the existing assessment rate 
schedule for the second semiannual assessment period of 1995 so that 
recapitalization is accomplished as soon as possible. The SAIF had an 
estimated balance of $1.8 billion (unaudited) at year-end 1994, and 
SAIF assumes resolution responsibility from the RTC on July 1, 1995. 
Although estimated failed-institution assets appear manageable for 1995 
and 1996, the SAIF remains vulnerable in the short run to a single 
large-institution failure and to any significant increase in 
anticipated loss rates.

VI. Request for Public Comment

    Based upon the results of its semiannual review of the 
recapitalization of the SAIF and of the SAIF assessment rates, the FDIC 
is inclined to retain the existing assessment rate schedule applicable 
to SAIF-member institutions. The FDIC wishes to have the benefit of 
public comment before ending its review for this period, however. The 
FDIC therefore requests comment as to whether it is appropriate for the 
FDIC to retain the existing assessment rate schedule applicable to 
SAIF-members, or whether the rates should be lowered to the statutory 
minimum of 18 basis points or some point in between. The FDIC is 
interested in receiving analyses exploring the impact a differential 
between BIF and SAIF premiums might have on SAIF members, and the FDIC 
invites comment as to whether the current spread of 8 basis points from 
the lowest to the highest assessment rates should be retained for SAIF 
members. The FDIC solicits comment as to how lower SAIF rates would 
impact current efforts to recapitalize the SAIF. The FDIC further 
invites comments as to whether current rates are sufficient to 
recapitalize the SAIF in an expeditious manner.

VII. Paperwork Reduction Act

    No collection of information pursuant to section 3504(h) of the 
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) are contained 
in this proposed rule. Consequently, no information has been submitted 
to the Office of Management and Budget (OMB) for review.

VIII. Regulatory Flexibility Analysis

    The Board hereby certifies that the proposed rule would not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601, et 
seq.). This proposed rule will not necessitate the development of 
sophisticated recordkeeping or reporting systems by small institutions 
nor will small institutions need to seek out the expertise of 
specialized accountants, lawyers, or managers to comply with this 
proposed rule. Therefore, the provisions of that Act regarding an 
initial and final regulatory flexibility analysis (Id. at 603 and 604) 
do not apply here.

List of Subjects in 12 CFR Part 327

    Assessments, Bank deposit insurance, Banks, Banking, Financing 
Corporation, Savings associations.

    For the reasons set forth in the preamble, the Board of Directors 
of the Federal Deposit Insurance Corporation proposes to amend part 327 
of title 12 of the Code of Federal Regulations as follows:

PART 327--ASSESSMENTS

    1. The authority citation for part 327 continues to read as 
follows:

    Authority: 12 U.S.C. 1441, 1441b, 1817-1819.

    2. Paragraph (c)(1) of Sec. 327.9 as added at 59 FR 67165, 
effective April 1, 1995, will be retained without change. The text of 
paragraph (c)(1) is republished for the convenience of the reader to 
read as follows:


Sec. 327.9  Assessment rate schedules.

* * * * *
    (c) SAIF members. (1) Subject to Sec. 327.4(c), the annual 
assessment rate for each SAIF member shall be the rate designated in 
the following schedule applicable to the assessment risk classification 
assigned by the Corporation under Sec. 327.4(a) to that SAIF member 
(the schedule utilizes the group and subgroup designations specified in 
Sec. 327.4(a)):

                                Schedule                                
------------------------------------------------------------------------
                                                         Supervisory    
                                                           subgroup     
                   Capital group                    --------------------
                                                       A      B      C  
------------------------------------------------------------------------
1..................................................     23     26     29
2..................................................     26     29     30
3..................................................     29     30     31
------------------------------------------------------------------------

* * * * *
    By the order of the Board of Directors.

    Dated at Washington, D.C., this 31 day of January, 1995.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
[FR Doc. 95-3669 Filed 2-15-95; 8:45 am]
BILLING CODE 6714-01-P