An FDIC proposal to expand the definition of “deposit broker” would significantly alter the agency’s brokered deposit regulatory framework and reverse existing interpretations of law, all without sufficient data or a robust rationale to support the changes, the American Bankers Association and 10 financial sector associations said today in a joint letter to the agency.
The FDIC board in July voted 3-2 to expand the definition to capture many deposit placement arrangements that currently do not meet the criteria for enhanced scrutiny under current regulation, such as sweep deposits and those related to financial technology and cryptocurrency. The proposal would amend a 2020 rule that FDIC Chairman Martin Gruenberg and the other board members believe is too narrow in scope. In their letter, the associations said the decision to move forward with the proposal was particularly concerning given the 2020 rulemaking was preceded by years of public comment and industry outreach—none of which took place with the new proposal.
“In the absence of data and sufficient rationale for revising the brokered deposits framework at this time, we believe the proposal should be withdrawn until the FDIC conducts additional analysis and makes it available to the public for comment,” the associations said.
They added that if it isn’t withdrawn, then the FDIC should publish the data driving the proposal and extend the comment period by 60 days after publication to give all interested parties time to study that data and provide informed feedback. Such an extension would align the public comment period with the comment period provided when the FDIC last proposed changes to its brokered deposits regulations, they said.
