WASHINGTON — Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif., criticized the Federal Deposit Insurance Corp. for not doing more to prevent banks from revising the amount of uninsured deposits they hold.
The FDIC said last week that some banks are undercounting their uninsured deposits after the agency said it would base a “special assessment” to the Deposit Insurance Fund based on the level of uninsured deposits that banks hold. The special assessment will be levied to refill the Deposit Insurance Fund after federal regulators declared a systemic risk exception to guarantee the uninsured deposits of the failed 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 lawmakers said in the letter. “The banks’ revisions to their reports, however, do have important implications.”
Warren and Porter specifically call out Bank of America, which the lawmakers said restated its uninsured deposits by $125 billion, 14% lower than what it originally reported, and Huntington Bank, which provided numbers 40% lower than originally reported.
Revising uninsured deposits downward would reduce 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 said.
“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 said in the letter. “And the agency does have powerful tools.”
The FDIC can fine banks no more than $1 million, or 1% of total assets, whichever is smaller, of a bank that knowingly or with reckless disregard for the accuracy of any information or report, submits or publishes any false or misleading information, for each day the false or misleading information is not corrected, Warren and Porter said.