FDIC Issues Proposal to Reform Brokered Deposit Regulations

The FDIC today issued a long-awaited proposal to modernize the existing brokered deposit rules and foster greater innovation by financial institutions. The proposal would clarify the definition of “deposit broker” to more accurately reflect the industry today and take into account the vast number of technological advances that have changed how banks take deposits. It would also establish an application and reporting process for depository institutions wishing to utilize the rule’s “primary purpose exception.”

The American Bankers Association has long called for an update to the brokered deposit rules, and pointed out in previous comments that under the current rules—which have not been updated for almost three decades—many entities such as social media platforms, fintech partners and bank subsidiaries could all be considered deposit brokers.

ABA President and CEO Rob Nichols applauded the move. “The rules in place today are holding back innovation, and we believe they need to take into account the new tools customers now use to interact with their bank,” he said. Comments on the proposal are due 60 days after publication in the Federal Register. ABA is carefully reviewing the proposal and will submit comments.