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ICBA and 10 industry associations requested that the FDIC withdraw its proposed rulemaking relating to brokered deposit restrictions. If the FDIC does not withdraw the proposed rule, the associations requested that the FDIC publish its brokered deposits data and extend the comment period by 60 days.
Details: The associations said the brokered deposits proposal would significantly alter the FDIC’s brokered deposit framework, and reverse statutory interpretations without sufficient or transparent data or rationale. The associations also noted that the proposal would have a significant impact on financial institutions and undo other recent FDIC rules.
Coalition: Joining ICBA on the letter are the American Bankers Association, American Fintech Council, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Financial Technology Association, Innovative Payments Association, Institute of International Bankers, National Association of Industrial Bankers, and Securities Industry and Financial Markets Association.
Background: The FDIC in late July issued a proposed rule to revise regulations on brokered deposits citing recent events including the failures of Silicon Valley Bank and First Republic, the failure of Voyager Digital Holdings, and the bankruptcy of the nonbank deposit broker Synapse Financial Technologies. The agency said the rule would simplify the definition of “deposit broker;” eliminate the “exclusive deposit placement arrangement” exception; revise rules on the primary purpose exception; and require regulators to consider the third party’s intent in placing customer funds at a particular depository institution.
More: The FDIC in 2020 approved a revised framework for determining whether deposits made through deposit arrangements qualify as brokered deposits. In a comment letter submitted to the FDIC, ICBA told the agency that “brokered deposits can be a stable source of funding and a cost-effective way for community bank to meet their funding needs provided the risks of holding these accounts are managed properly.”