Fed proposes charging banks $440M to fund Dodd-Frank oversight

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According to its proposal, the first year's fees, to be collected by the government for oversight done in 2012, would be an estimated $440 million.

A portion of the Dodd-Frank law states that the board can collect fees or assessments "equal to the total expenses the Board estimates are necessary or appropriate to carry out the supervisory and regulatory responsibilities of the Board with respect to such companies."

Under the law, banks with over $50 billion in assets will have to pay the cost, and other financial institutions may have to in the future, if the Treasury Department's Financial Stability Oversight Council decides they should be subject to the board's oversight.

The Fed asserts that larger financial institutions demand larger regulatory scrutiny, and hence should pay for the extra work.

"Larger companies are often more complex companies, with associated risks that play a large role in determining the supervisory resources needed for that company," the proposal states. "The largest companies, because of their increased complexity, risk and geographic footprints, usually receive more supervisory attention."

The fee would reimburse the board for any expenses it undertook in the course of its supervision of the banks, potentially including expenses arising from examinations and inspections of financial institutions, meetings, stress tests, enforcement actions and developing and explaining regulations.

Under the proposal, assessments after 2014 will be based on a three-year average of the Fed's estimated expenses, and financial institutions will be notified of the amount they had to pay for the previous year by July 15. Institutions will have an option to appeal the charge.

The board's proposal will be published in the Federal Register on Thursday, and the board will accept comments until June 15.