ICBA urged the FDIC to withdraw its proposed rulemaking on brokered deposits to avoid harming community banks.
ICBA Comments: In a comment letter, joint letter with state banking associations, and industry letter with other national banking groups, ICBA said the proposal would constrain community bank access to liquidity and disrupt third-party relationships that provide valued online banking and deposit services to customers. ICBA urged the agency to not subject the industry to rapidly changing deposit regulations or steep compliance costs.
More: In its comments, ICBA also said the proposal would:
Inject a high degree of regulatory uncertainty into the banking system by rescinding all approved primary purpose exception applications and notices.
Force banks to reclassify stable, core deposits as “brokered.”
Classify more third parties as deposit brokers simply because they collect a fee for their services.
Restrain liquidity and force community banks to shed stable deposits.
Violate the Administrative Procedure Act because the FDIC relied upon insufficient data, flawed rationale, and a deficient cost-benefit analysis to advance its rulemaking.
About the Proposal: Although the FDIC finalized revisions to its brokered deposits regulations in 2020, the agency in July proposed to reverse significant aspects of the 2020 framework, citing the 2023 large bank failures and the collapse of the nonbank deposit broker Synapse Financial Technologies. If finalized, more deposits would be considered brokered and fewer would be considered core deposits.
Previous Response: ICBA and other groups previously called on the FDIC to withdraw the proposal, noting it would reverse statutory interpretations without sufficient or transparent data or rationale, have a significant impact on financial institutions, and undo other recent FDIC rules.
Grassroots Campaign: ICBA thanks community bankers for submitting personalized comment letters in opposition to the proposal and will continue working with policymakers in support of a withdrawal.
