FDIC's Brokered Deposit Proposal Draws Fire from Trade Groups

Trade Groups Urge FDIC to Reconsider Brokered Deposit NPRM

Industry representatives express concerns over potential impact on community banks and financial stability

Washington, D.C. - March 8, 2023 - A coalition of trade groups representing community banks and credit unions has called on the Federal Deposit Insurance Corporation (FDIC) to withdraw its proposed rule on brokered deposits.

The proposed rule, known as the Brokered Deposit NPRM, would impose new restrictions on banks and credit unions that accept brokered deposits. These deposits are typically large, short-term deposits that are placed by third-party brokers on behalf of their clients.

The trade groups argue that the proposed rule would have a disproportionate impact on community banks and credit unions, which rely on brokered deposits to fund their lending activities. They also contend that the rule would increase the cost of borrowing for consumers and businesses, and could potentially destabilize the financial system.

In a letter to the FDIC, the trade groups urged the agency to withdraw the proposed rule and engage in a more thorough analysis of its potential impact. They also requested that the FDIC hold public hearings on the rule to gather input from all stakeholders.

The FDIC has not yet responded to the trade groups' request. The agency is expected to issue a final rule on brokered deposits later this year.