Today at 1:30 p.m. Eastern time, the FDIC Board of Directors met to make a final decision on the special assessment that will be issued to replenish the Deposit Insurance Fund. The Board elected to issue a 5 basis point (.05 per $100) assessment on banks’ total assets minus tangible tier 1 capital. Recall that the original proposal was a 20 basis point assessment on total insured deposits. The final rule is a tremendous success for Sub S Banks as it shifts the burden of replenishing the Deposit Insurance Fund away from smaller community banks, allowing them to focus their efforts on serving the communities in which they operate. 

The rule will not permit Banks to amortize the assessment expense however. Rather, Banks will be forced to expense the special assessment in the third quarter of 2009 when it is due.