WASHINGTON — Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif., slammed the Federal Deposit Insurance Corp. for refraining from doing more to avoid banks from modifying the quantity of uninsured deposits they hold.
The FDIC stated recently that some banks are undercounting their uninsured deposits after the company stated it would base a “special assessment” to the Deposit Insurance Fund based upon the level of uninsured deposits that banks hold. The unique evaluation will be imposed to fill up the Deposit Insurance Fund after federal regulators stated a systemic threat exception to ensure the uninsured deposits of the stopped working Silicon Valley Bank and Signature Bank in March.
“This is much more than a technical matter, and there is no excuse for the banks’ inaccurate reporting: The reporting requirements here are not new, nor are they confusing,” the legislators stated in the letter. “The banks’ revisions to their reports, however, do have important implications.”
Warren and Porter particularly call out Bank of America, which the legislators stated reiterated its uninsured deposits by $125 billion, 14% lower than what it initially reported, and Huntington Bank, which supplied numbers 40% lower than initially reported.
Revising uninsured deposits downward would decrease banks’ payment to the FDIC, which would “leave a gap in the DIF that could result in significant problems in the event of another large bank failure, or series of bank failures,” Warren and Porter stated.
“Given the importance of accurate reporting on uninsured deposits, it is critical that the FDIC use all of its tools to ensure that banks are meeting their requirements,” they stated in the letter. “And the agency does have powerful tools.”
The FDIC can fine banks no greater than $1 million, or 1% of overall properties, whichever is smaller sized, of a bank that intentionally or with careless neglect for the precision of any details or report, sends or releases any incorrect or deceptive details, for each day the incorrect or deceptive details is not fixed, Warren and Porter stated.