Banking Titans Flock to Fortify FDIC’s Safety Measures
The largest banks in America are getting ready to allocate significant sums of money to the Federal Deposit Insurance Corporation (FDIC) to replenish an insurance fund currently supporting the financial system.
These banks, including JPMorgan, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group, and Citigroup, are expected to collectively contribute $8.2 billion to restore the emergency fund, as reported by Reuters.
JPMorgan is taking the lead in this effort by committing a substantial $3 billion, significantly more than the other banks’ contribution.
This financial commitment is part of the FDIC’s strategy, introduced in May, known as the “special assessment.” This strategy aims to establish a new framework where substantial payments from large financial institutions cover the costs associated with protecting depositors.
Under this new framework, financial institutions with assets exceeding $50 billion are required to contribute 95% of the special assessment. Meanwhile, those with assets under $5 billion are exempt from this assessment. The FDIC states that 113 firms are subject to these new regulations.
According to the FDIC’s explanation, the special assessment is being applied to banking institutions that have benefitted the most from the safeguards provided to uninsured depositors.
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Essentially, the primary beneficiaries of this determination of systemic risk are the prominent banks with considerable holdings of uninsured deposits.
The FDIC’s move coincides with major US financial institutions solidifying their control over the national banking system, even as many smaller competitors are being forced to shut down. A recent example is the closure of Heartland Tri-State Bank of Elkhart, Kansas on July 28th. The FDIC states that its assets were transferred to Dream First Bank, National Association (N.A.), also located in Kansas.
JPMorgan, the largest bank in the US, reported impressive results for the second quarter, with a remarkable 67% increase in quarterly profits, amounting to $14.47 billion for the period ending on June 30th. This achievement is noteworthy despite a significant drop in deposited funds.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
