In a letter to the FDIC, the American Bankers Association said that the deposit data currently collected in the agency’s call reports is not a good indicator of risk and may encourage examiners, investors and other stakeholders to focus too narrowly on single data points when assessing a bank’s financial condition. Rather, “an enhanced view of a bank’s liquidity exposure may be beneficial to market participants,” ABA said.
Earlier this year, the FDIC issued a request for information on deposit data not currently reported in call reports or other regulatory reports, including uninsured deposits. Among other things, the agency sought public input on whether more detailed or frequent reporting could enhance risk and liquidity monitoring. It also sought input on the benefits and costs associated with additional deposit insurance coverage.
ABA said in its comments that it supports the inquiry as a first step in a broader review of the issue. It is important that supervisors and market participants have accurate data from which to assess a bank’s financial condition and risk exposure, but it is also vital that any additional reporting requirements be reasonable and workable for banks of all sizes, the association said.
ABA had multiple recommendations for approaching the question of how to report deposit data. For example, the association recommended that the FDIC coordinate with other banking agencies, and consider existing rules, when trying to assess deposit stability and behaviors. It encouraged the use of industry focus groups to provide feedback on any proposed changes to call reports. It suggested that top-line data on operational deposits — as defined in the Liquidity Coverage Ratio — would be a better measurement for the reporting of estimated uninsured deposits in call reports.
ABA also recommended the agency address the question of deposit insurance as a separate issue. “Many of our members remain concerned with the fairness and transparency of our current deposit insurance and resolutions system, and it is important that the FDIC begin a process to assess the pros and cons of various options, building off ideas it previously outlined,” the association said. “We know our members will be eager to share their perspectives on potential reforms.”
“Meaningful conversation about deposit insurance, resolutions, liquidity risk identification, management and mitigation, and implementation of any related reporting changes, will take significant care and effort,” ABA added. “We support the [request for information] and encourage ongoing work; the banking industry is ready to lend our best efforts to this initiative.”
