Bank / Credit Union

FDIC calls out banks for incorrect uninsured deposit statements

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July 25, 2023

The Federal Deposit Insurance Corp. has called out banks for containing incorrect data on financial statements. The statements showed lower uninsured deposits that the banks held. The FDIC has called for a special fee based on the size of uninsured deposits in response to the collapse of Silicon Valley Bank, Signature Bank and First Republic, according to a report by Yahoo Finance citing Reuters.

The regulator aims to recoup its losses from the collapse of SVB and the other banks by imposing a fee on banks based on their total uninsured deposits at the end of 2022. However, it claimed some banks were, "not reporting estimated uninsured deposits in accordance with the instructions."

The FDIC said banks must report uninsured deposits that are backed by pledged assets and ones held at subsidiaries.

"If your institution incorrectly reduced the amount of reported uninsured deposits, for example, to reflect collateralization of deposits by pledged assets or by excluding intercompany deposit balances of subsidiaries, those reports are inaccurate," the FDIC said in a statement.

Bank of America claims it revised its uninsured deposit reports to remove intra-bank accounts. Larger banks have also claimed that this proposed fee by the FDIC would unfairly target them.

There have been increasing calls to regulate both banks and pay for CEOs of failed banks. In particular, a proposed bill in Congress would take back pay from CEOs of banks such as SVB.