2023 Options for Deposit Insurance Reform | 33 

Section 5: Tools to Support Objectives 

and Address Possible Consequences 

The effectiveness of deposit insurance depends 

critically on its interaction with other policy tools. 

Tools can increase the efficacy with which deposit 

insurance promotes financial stability or may dampen 

undesirable consequences associated with deposit 

insurance. Changes to deposit insurance coverage 

should be made in conjunction with an evaluation of 

the best associated policy tools. 

Bank Regulation and 

Supervision 

Bank regulation and supervision play a major role in 

promoting financial stability, limiting the moral hazard 

concerns posed by deposit insurance, and responding 

promptly to risks that arise. For this discussion, 

regulation refers to the body of written rules in the 

Code of Federal Regulations, which have the force of 

law. Supervision refers to the totality of actions the 

federal banking agencies can take to enforce the rules 

and to carry out their respective statutory mandates 

to ensure the safe and sound operation of banks. 

This section refers collectively to supervision and 

regulation as the risk control framework. 

This section identifies five areas within the risk control 

framework that may play critical roles in supporting the 

objectives and mitigating the undesired consequences 

of deposit insurance: capital, liquidity, long-term debt, 

interest rate risk, and growth supervision. 

Capital 

Capital requirements can minimize the potential 

for moral hazard and promote safe and sound 

banking practices by increasing the costs of risktaking to shareholders, thus increasing shareholder 

discipline. Higher levels of deposit insurance coverage 

weaken depositor discipline and increase bank 

risk-taking incentives. Meanwhile, shareholders 

disproportionately benefit on the upside of such risktaking relative to creditors. Higher levels of capital 

make shareholders more attuned to the downside 

of risk and so increase shareholder discipline, which 

mitigates moral hazard. Therefore, to the extent that 

increased deposit insurance limits erode depositor 

discipline, capital requirements can be used to 

mitigate moral hazard concerns. 

Recent developments have also focused attention on 

the definition of capital for regulatory purposes. In 

accordance with U.S. generally accepted accounting 

principles (GAAP), an institution must measure and 

recognize available-for-sale (AFS) debt securities at 

fair value on the balance sheet, while held-to-maturity 

(HTM) debt securities are carried at amortized cost. 

For AFS debt securities, unrealized holding gains and 

losses are excluded from earnings and reported in a 

separate component of equity capital: accumulated 

other comprehensive income (AOCI). AOCI is excluded 

from regulatory capital for most institutions.107 

Meanwhile, HTM debt securities are not adjusted to 

fair value in accordance with GAAP and for financial 

reporting purposes. 

Accumulating unrealized losses on debt securities 

increases the likelihood of a run by uninsured 

depositors when those losses are large compared to 

capital. This is because withdrawals coordinated with 

the sale of these debt securities force the recognition 

of losses and promptly force a bank into insolvency. 

For example, SVB’s year-end 2022 Call Report reported 

tier 1 capital of about $17.0 billion; it also reported 

unrealized holding losses of $2.5 billion on AFS 

securities and $15.2 billion on HTM securities. None 

of these losses lowered its tier 1 capital under the 

regulatory capital regulations. 

A more rigorous approach to valuing securities for 

regulatory capital purposes may induce institutions 

to either limit their exposure to highly interest-rate 

sensitive assets or take steps to raise capital, limit 

dividends, shed securities, or hedge their exposures 

earlier when interest rates start to increase. If net 

unrealized holding losses on AFS or HTM debt 

securities are reflected in regulatory capital, then 

107AOCI is a component of regulatory capital for advanced approaches banks and other institutions that opted into including it. See 12 CFR Part 324, Capital 

Adequacy of FDIC-Supervised Institutions, https://www.ecfr.gov/current/title-12/chapter-III/subchapter-B/part-324. 
34 | 2023 Options for Deposit Insurance Reform 

institutions would have had to take actions to increase 

their capital or face regulatory restrictions. Future 

changes to regulatory capital calculations could 

range from incremental steps such as expanding the 

recognition of AOCI in regulatory capital to a larger 

group of banks to more comprehensive changes to 

the regulatory capital framework. It is possible that 

the recognition of net unrealized holding losses 

through the inclusion of AOCI in regulatory capital 

would still prompt withdrawals of uninsured deposits. 

However, incorporating AOCI in regulatory capital 

can promote financial stability by compelling earlier 

remediation actions and prevent the accumulation of 

net unrealized holding losses. 

Liquidity 

Liquidity regulations can complement deposit 

insurance to mitigate stability risks associated with 

funding long-term assets with short-term liabilities. 

For example, the Liquidity Coverage Ratio (LCR) and 

Net Stable Funding Ratio (NSFR) apply fully to the 

U.S. global systemically important banks (GSIBs). 

Also, the LCR and NFSR apply to institutions with $250 

billion or more in assets, with the degree of stringency 

depending on thresholds related to average weighted 

short-term wholesale funding, and a subset of banks 

between $100 billion and $250 billion that meet 

certain criteria. SVB and Signature, for example, were 

not subject to the LCR or NSFR rules. 

Liquidity regulations can support financial stability 

objectives to ensure that banks retain sufficient liquid 

assets to account for the risk of outflows, including 

uninsured depositor runs. For example, simple limits 

on uninsured depositor funding for banks, or unstable 

short-term funding more broadly, can reduce the 

exposure of banks to runs, while requirements on 

liquid assets can provide depositors confidence that 

banks hold sufficient liquidity to meet outflows. 

Alternatively, regulations like the LCR and NSFR can 

reduce the mismatch that naturally arises in banks 

that use short-term liabilities to fund long-term assets. 

Interest Rate Risk 

The incorporation of interest rate risk as part 

of capital or liquidity regulations, or through a 

supervisory approach, can also support financial 

stability objectives.108 Interest rate risk for activities 

banks conduct in their trading books are captured, 

in principle, by trading book capital rules, but no 

regulation exists that provides an explicit constraint 

on how much interest rate risk banks can take for 

exposures held in the banking book.109 Based on 

feedback from commenters, the Basel Committee 

on Bank Supervision did not pursue a regulatory 

approach but subsequently published principles 

for the measurement and management of interest 

rate risk.110 

Enhanced risk management standards for interest rate 

risk may reduce risks to financial stability. Evaluating 

the tradeoffs associated with different options 

to address interest rate risk within the regulatory 

and supervisory frameworks is a topic meriting 

consideration but beyond the scope of this report. 

Long-Term Debt 

Long-term unsecured debt requirements can support 

the financial stability objective of deposit insurance 

in several ways. For example, in 2016, the Federal 

Reserve published a final rule to require U.S. GSIBs 

and the U.S. operations of foreign GSIBs to meet a 

long-term debt requirement and a total loss-absorbing 

capacity, or TLAC, requirement.111 As described by 

the Federal Reserve, the requirement to maintain 

sufficient amounts of long-term debt, which can be 

converted to equity during resolution, was intended to 

help facilitate an orderly resolution of an institution in 

the event of failure.112 

108 Interest rate risk management is discussed in “Interagency Guidelines Establishing Standards for Safety and Soundness” in Appendix A of Part 364 of FDIC 

regulations. In addition, sensitivity to market risk—including interest rate risk—has been part of the Uniform Financial Institution Rating System since 1997. 

Supervisors require banks to manage their interest rate risk exposures, and failure to meet standards can subject them to enforcement actions. See Fed. Reg., 

Vol. 61, No. 245, December 19, 1996, https://www.fdic.gov/news/financial-institution-letters/1996/fil96105.pdf. 

109The trading book capital rules apply only to banks with sufficiently large trading accounts. See Basel Committee on Bank Supervision, Consultative Document: 

Interest Rate Risk on the Banking Book, September 11, 2015, https://www.bis.org/bcbs/publ/d319.pdf. 

110Basel Committee on Banking Supervision, Standards: Interest Rate Risk in the Banking Book, April 2016, https://www.bis.org/bcbs/publ/d368.pdf. 

111 Fed. Reg. 2017-00431, https://www.govinfo.gov/content/pkg/FR-2017-01-24/pdf/2017-00431.pdf. 

112On October 24, 2022, the FDIC and the Board of Governors of the Federal Reserve published an advance notice of proposed rulemaking regarding ResolutionRelated Resource Requirements for Large Banking Organizations that sought comment on the advantages and disadvantages of requiring an expanded group of 

large banking organizations to maintain long-term debt. See 87 Fed. Reg. 64170. 
2023 Options for Deposit Insurance Reform | 35 

Although long-term debt requirements have been 

viewed primarily as a resolution tool and applied to 

bank holding companies rather than banks, long-term 

unsecured debt may also support deposit insurance 

by mitigating moral hazard incentives at banks. For 

example, a significant increase in explicit deposit 

insurance coverage could increase incentives for 

banks to fund themselves with deposits and whatever 

equity is required, and very little debt. In the case 

of full deposit insurance coverage, banks may have 

little incentive to fund their operations with long-term 

unsecured debt. The scope and cost of the deposit 

insurance safety net could greatly expand as a result. 

In contrast to shareholders, long-term debtholders 

are asymmetrically exposed to the downside of bank 

risk-taking; they do not reap the benefits of bank 

risk-taking and are exposed to losses when bank risktaking goes wrong. Moreover, long-term debt holders 

cannot run before the scheduled maturity date, 

incrementally reducing the bank’s exposure to run 

risk. Their exposure to loss and the long-term nature of 

that exposure give long-term unsecured debtholders 

strong incentives relative to shareholders to monitor 

and discipline bank risk-taking by charging banks 

a premium for risk-taking on their issuances or by 

refusing to roll over maturing debt. Increased yields on 

long-term unsecured debt or difficulties in rolling over 

debt can act as an early-warning indicator for bank 

supervisors and trigger intervention that may avert the 

need for a resolution. As an alternative to depositor 

discipline, which is often exerted in the form of a run, 

market discipline through long-term debt—through 

the refusal to roll over long-term debt or through 

pricing—may promote financial stability. 

Either to support financial stability objectives or 

mitigate moral hazard concerns associated with 

deposit insurance, the expansion of the application of 

long-term debt requirements beyond the U.S. GSIBs 

is worthy of careful consideration as part of deposit 

insurance reform. 

Rapid Growth 

Strengthening supervision surrounding rapid bank 

growth may also support deposit insurance objectives. 

Rapid growth is generally recognized as a potential 

indicator for bank risk-taking and the first stage in 

the development of bank financial distress. Rapid 

growth may signal an increase in risk-taking for several 

reasons. First, rapid growth is often coupled with a 

relaxation in loan standards or an expansion into 

new lending businesses. Second, rapid growth likely 

occurs during benign economic environments, and the 

bank and its borrowers are insufficiently tested in an 

economic downturn. Third, as was the case with the 

banks that failed in March 2023, rapid asset growth is 

often fueled by volatile forms of funding. Compared to 

a similarly sized bank with stable growth, the funding 

base at a bank that has grown rapidly is less likely to 

have long-standing relationships with the bank and 

may therefore be more inclined to withdraw funds in 

response to signals of stress.113 

Deposit Insurance Pricing 

Deposit insurance can cause moral hazard as it 

removes incentives for insured depositors to monitor 

banks, allowing bank management to take on 

excessive risk. Risk-based deposit insurance pricing 

that charges premiums commensurate with the risk 

assumed by banks can mitigate moral hazard.114 Riskbased pricing can also promote fairness, whereby 

banks that pose higher risk pay higher premiums and 

mitigate cross-subsidization from lower-risk to higherrisk banks. 

It is difficult to measure bank risk and price 

accurately.115 Data limitations are one of the major 

challenges. Although quarterly bank financial 

filings are extensive, they often lack enough detail 

to accurately price risk. In addition, failures are 

relatively rare events and are clustered in time. 

Statistical analyses that rely on past predictive risk 

factors are less capable of capturing new risks in the 

system, especially when failures are associated with 

macroeconomic events. Liquidity risk measurement 

is especially challenging as bank runs are far fewer 

compared with insolvency failures. Moreover, 

government intervention in recent and past bank runs 

impedes measuring historical losses that would have 

occurred absent extraordinary measures. 

113 FDIC (1997). 

114Ehrlich and Becker (1972), Demirgüç-Kunt and Detragiache (2002), Hovakimian, Kane, and Laeven (2003), and Shoukry (Forthcoming). 

115The goals of risk-based pricing include additional objectives, such as transparency. For the purposes of this report, risk-based pricing is discussed primarily in 

regard to its ability to affect bank risk-taking. 
36 | 2023 Options for Deposit Insurance Reform 

A risk-based pricing system is unlikely to fully and 

accurately reflect the risks posed by banks. Despite 

such challenges, a well-designed system can help 

measure material risks, identify riskier banks and 

charge those banks higher premiums, and discourage 

banks from excessive risk-taking. Changes to pricing 

based on bank liability structure and interest rate risk 

may mitigate moral hazard concerns and maintain 

fairness within a deposit insurance system. 

Pricing for Risks in Liability Structure 

Bank liability structure can influence the FDIC’s risk 

position in several ways. First, the FDIC’s deposit 

insurance assessment revenue depends on how a 

bank funds its assets between equity and liabilities. 

The assessment base used to calculate the deposit 

insurance premium is average consolidated total 

assets minus average tangible equity, which 

approximates a bank’s total liabilities. The more a 

bank funds its assets with liabilities instead of equity, 

the higher the assessment base and the higher the 

assessment revenue. 

Second, the FDIC’s loss exposure is determined 

by the failed bank liability structure. The National 

Depositor Preference statute in the Omnibus Budget 

Reconciliation Act of 1993116 established the following 

priority order of receivership claims of creditors if a 

bank fails:117 

1. Secured claims 

2. Administrative expenses of the receivership 

3. Domestic deposit liabilities 

4. General creditor claims including unsecured 

borrowing and foreign deposits 

5. Subordinated claims 

6. Cross-guarantee claims 

7. Stockholders 

When a bank fails, secured liabilities such as FHLB 

advances, repurchase agreements, public deposits, 

and borrowings from the Federal Reserve Bank 

discount window have the highest priority claim 

on the receivership. Assets used as collateral for 

secured liabilities are unavailable to the FDIC. Then, 

administrative expenses of the receivership are paid. 

Insured deposits are paid in full by the FDIC, and then 

the FDIC replaces the insured depositors in the priority 

of payments. Domestic depositors have priority over 

non-collateralized, non-deposit creditors.118 Then, 

general creditors are paid, followed by subordinate 

creditors and finally stockholders. 

Based on the priority of the claims, a bank’s loss given 

failure is influenced by its liability structure. Banks 

with high shares of secured liabilities and insured 

deposits will result in higher cost to the FDIC compared 

to banks with identical assets but with lower secured 

liabilities and insured deposits. 

Third, a bank’s liability structure can influence its risktaking behavior. Secured liabilities are collateralized 

and are first in priority of the claims.119 As a result, 

the holders of these liabilities have little incentive 

to monitor or discipline banks beyond the specific 

collateral backing their claim. Banks that rely more 

heavily on secured liabilities and less on unsecured 

credits subject themselves to less market discipline. 

In addition, readily available secured liabilities can 

fuel a bank’s high growth strategies, which have 

been associated historically with increased failure 

probability. The current deposit insurance pricing 

system accounts for the effect secured liabilities can 

have on expected failure losses by including liabilities 

in the assessment base. Similarly, unsecured liability 

holders can affect the risk-taking behavior of banks 

because they have an incentive to impose market 

discipline on banks by demanding a higher rate 

when banks assume greater risk (see Regulation 

and Supervision). 

The deposit insurance pricing systems for large 

banks and highly complex banks include liquidity 

risk measures to capture these institutions’ ability to 

withstand funding-related stress and the relative 

116Pub. L. 103-66, § 3001. 

117 FDIC (2000) and Marino and Bennett (1999). 

118Under depositor preference, insured depositors (subrogated claims of the FDIC) and uninsured depositors share in losses and incur the same loss rate on 

their claim. 

119According to Shibut (2002), borrowings from the Federal Reserve Board discount window face potential loss because FDICIA allows the FDIC to charge the 

Federal Reserve Board for failed-bank losses attributable to discount window borrowings made to undercapitalized banks. 
2023 Options for Deposit Insurance Reform | 37 

magnitude of potential losses to the FDIC should such 

an institution fail.120 The funding-related stress metrics 

for these banks are composed of a core deposit to 

total liabilities ratio and a balance sheet liquidity ratio. 

The core deposit metric excludes uninsured, nonbrokered time deposits. Meanwhile, balance sheet 

liquidity metrics measure highly liquid assets relative 

to potential short-term outflows, including outflows of 

uninsured deposits. In addition, funding-related stress 

metrics for highly complex banks include an average 

short-term funding to average total assets ratio that 

measures a bank’s reliance on short-term funding.121 

The loss severity measure applies a standardized set 

of assumptions regarding liability runoffs, including 

uninsured deposit runoff, and the recovery value 

of asset categories to calculate possible losses to 

the FDIC. 

The measures of a bank’s ability to withstand fundingrelated stress used in pricing do not explicitly account 

for the liquidity risk posed by bank reliance on 

uninsured deposits. Implicitly, funding-related stress 

is captured in part by including liquidity (“L”) and 

sensitivity to market risk (“S”) in supervisory bank 

CAMELS ratings. Uninsured deposits are a form of 

unsecured credit that pose liquidity risk to a bank. 

Ensuring that such risks are appropriately addressed 

within large and highly complex banks could involve 

changes to the current pricing systems.122 Changes 

to account for uninsured deposit risk directly could 

be made within the scorecards applicable to these 

institutions or could take the form of a separate 

adjustment measure that increases a bank’s 

assessment rate to reflect increased risk to the DIF. 

Adjusting pricing for uninsured deposit risks at large or 

highly complex banks would be an incremental change 

and may fit within existing liquidity approaches 

applied to these institutions. 

Pricing Interest Rate Risk 

Interest rate risk is the potential for movements in 

interest rates to reduce bank earnings and capital. 

Interest rate risk is inherent in banking as banks 

generally borrow short and lend long. Banks make 

loans and other investments with longer maturity 

using non-maturity deposits and other liabilities that 

tend to have shorter maturities. 

Mismatch in asset and liability maturities exposes 

banks to repricing risk, one type of interest rate risk. 

The extent of mismatch in asset and liability maturities 

is important in assessing a bank’s exposure to interest 

rate risk. Aggregate balance sheet information in 

Figure 5.1 shows that the industry increased its 

exposure to longer-term assets while reducing its 

reliance on longer term liabilities, further escalating 

the mismatch in maturities. While on-balance sheet 

mismatch in asset and liability maturities is widening, 

it is possible that the banks are hedging their interest 

rate risk using off-balance sheet instruments such as 

interest rate derivatives. Figure 5.1 also shows the 

aggregate gross notional amount of interest rate risk 

derivative contracts held for purposes other than 

trading in the banking sector. While the notional 

amount of interest rate risk derivative contracts 

roughly doubled from 2010 to 2022, it has not kept up 

with the increasing trend in on-balance sheet asset 

and liability mismatch. Moreover, some portion of 

interest rate derivatives is likely accommodations to 

loan customers (for example, to convert a variable rate 

loan to fixed rate from the customer’s perspective) 

rather than hedges of banks’ own investments. The 

notional amount of interest rate risk derivatives is 

lower than the difference in long-term assets and 

liabilities.123 Overall, Figure 5.1 indicates that bank 

exposure to repricing risk has increased over time. 

120 For the purposes of deposit insurance pricing, a large bank is defined as an insured depository institution with assets of $10 billion or more. A highly complex 

bank is defined as (1) An insured depository institution (excluding a credit card bank) that has had $50 billion or more in total assets for at least four consecutive 

quarters that either is controlled by a U.S. parent holding company that has had $500 billion or more in total assets for four consecutive quarters, or is controlled 

by one or more intermediate U.S. parent holding companies that are controlled by a U.S. holding company that has had $500 billion or more in assets for four 

consecutive quarters, and (2) a processing bank or trust company, defined in 12 CFR 327.8(s). 

121Garnett, Henry, Hoople, and Mihalik (2020). 

122Deposit insurance pricing for large and highly complex institutions is outlined in 12 CFR Part 327.16(b). 

123 Figure 5.1 provides information on mismatch only for assets and liabilities that mature or reprice in more than a year and excludes those assets and liabilities 

with less than one year until maturity or repricing. The notional amount of interest rate risk derivatives graphed is for all interest rate risk hedging, which can 

include hedging for assets and liabilities with less than one year until maturity or repricing. As a result, the shortfall in notional amount of interest rate risk 

derivative contracts to cover the mismatch is likely to be greater than shown in Figure 5.1. 
38 | 2023 Options for Deposit Insurance Reform 

 

FIGURE 5.1 

Loans and Securities That Mature or Reprice in More Than 1 Year Rose 

Dramatically During the Pandemic 

Besides repricing risk, there are four other types of 

interest rate risk: yield curve risk, basis risk, option 

risk, and price risk.124 Yield curve risk refers to risk 

associated with changes in the shape or slope of 

the yield curve. If the yield curve flattens or inverts 

so that the short-term interest rate rises while the 

long-term rate remains the same or falls, then banks 

face higher funding cost when loan revenue remains 

the same or falls. Differences in maturity or repricing 

frequency of assets and liabilities also expose banks 

to yield curve risk. Basis risk refers to risk associated 

with unequal adjustments in different market rates. 

Even when assets and liabilities have similar repricing 

characteristics, the earnings spread from these 

instruments can differ because of the index rates used. 

For example, Treasury rate-based deposit rates can 

change differently than floating loan rates. Interest 

rate movements can also expose banks to option 

risk, which can change banks’ cash flow as a creditor 

or borrower exercises the option to withdraw or pay 

back debt at different times. For example, a depositor 

can withdraw funds to invest in higher-yielding 

instruments when interest rates rise, while a borrower 

can prepay and refinance a mortgage when interest 

rates fall. Price risk is the risk that market value 

instruments change value in response to movements 

in interest rates. When interest rates rise, the 

value of investment securities declines, causing 

unrealized losses. 

The deposit insurance pricing system could be 

improved by incorporating interest rate risk metrics, 

as they are not explicitly included but are implicitly 

included through the incorporation of supervisory 

ratings. Plausibly, price risk of interest rate movements 

can be incorporated into the system by measuring 

potential changes to the fair value of the bank’s 

investment securities from movements in the interest 

rate. Similarly, unrealized losses could be incorporated 

into risk-based pricing. In contrast, it would be difficult 

to include metrics to accurately measure repricing 

and yield curve risk of interest rate movements into 

the system. 

Refinements to deposit insurance pricing can allocate 

the cost of assessments more appropriately based on 

124 FDIC, “Sensitivity to Market Risk,” Risk Management Manual of Examination Policies, section 7.1, https://www.fdic.gov/regulations/safety/manual/ 

section7-1.pdf. 
2023 Options for Deposit Insurance Reform | 39 

the risks taken by institutions and can, to an extent, 

incentivize more prudent risk-taking by banks. But 

there are limits to the extent risks can be accurately 

priced and to the premiums the FDIC can realistically 

charge. Thus, while pricing is one tool that can account 

for risk in a deposit insurance regime, the limitations 

of pricing suggest that it should be part of a joint 

approach to manage risk-taking incentives alongside 

other tools discussed in this section. 

Fund Adequacy 

The FDI Act requires that the FDIC Board of Directors 

designate a reserve ratio for the DIF, known as the 

designated reserve ratio (DRR). The reserve ratio is 

measured as the ratio of the Fund balance (or net 

worth) to estimated insured deposits. The DRR is set 

by the Board based on analysis of the risk of losses 

to the DIF, economic conditions affecting insured 

depository institutions, prevention of sharp swings 

in assessment rates, and other factors the Board 

determines appropriate. The DRR for any year may not 

be less than 1.35 percent. Generally, if the reserve ratio 

falls below the statutory minimum of 1.35 percent or 

is expected to within six months, the FDIC must adopt 

a restoration plan to restore it to at least 1.35 percent 

within eight years. Since 2010, the Board has set the 

DRR at 2.0 percent with the view that the DRR is a longterm goal. 

Increases in insured deposits, because of increases 

in the deposit insurance limit or other changes, 

decrease the reserve ratio. So any changes to the 

deposit insurance limit should also consider the 

effect on the reserve ratio, including whether the 

minimum reserve ratio, set by law, and the DRR, set 

by the FDIC Board based on statutory factors, are 

still appropriate, and the amount of time required to 

reach these levels. Although precise information on 

the distribution of account balances is not available, 

the volume of uninsured deposits relative to the 

number of accounts suggests that a modest increase 

in the standard deposit insurance amount is unlikely 

to have significant implications for the reserve ratio. 

Eliminating a deposit insurance limit altogether and 

providing universal deposit insurance would increase 

the volume of insured deposits by about 70 to 80 

percent and decrease the reserve ratio by more than 

40 percent, excluding associated inflows that might 

result from more coverage.125 

Restoring the DIF to the statutory minimum reserve 

ratio, absent changes to requirements related to 

adopting a restoration plan, would require raising 

deposit insurance assessments on the industry. 

Because assessments are based on total assets less 

average tangible equity, or essentially total liabilities, 

an increase in insured deposits at a bank due to 

increases in the deposit insurance limit would not 

inherently result in greater assessment revenue. 

Instead, assessment rates would likely have to be 

increased across the entire industry. 

125Based on the Deposit Insurance Fund balance as of December 31, 2022.