ABA Supports Proposed Legislation on Brokered Deposits

In advance of a congressional hearing on consumer access to banking services this week, ABA today wrote to leaders of the House subcommittee on financial institutions and consumer credit voicing its support for several bills that would provide increased flexibility for brokered and reciprocal deposits.

Among these were H.R. 5660 — introduced by Rep. Roger Williams (R-Texas) — which clarifies that traditional deposit account products involving a direct, continuing relationship between a customer and an insured depository institution should not be considered brokered deposits, and H.R. 4116 — introduced by Rep. Gwen Moore (D-Wis.) — which updates the definition of “deposit broker” to allow a limited exemption for reciprocal deposits. The association also recognized a bill proposed by Rep. Scott Tipton (R-Colo.) that clarifies that prepaid card deposits are not considered brokered.

“Modern banking and technology… allows banks to gather stable deposits from outside of their branch networks,” ABA said. “Although we believe that the FDIC has the necessary flexibility under existing law to tailor its regulation and supervision of banks with respect to brokered deposits, we strongly support efforts to provide statutory clarity in this area.”