Trade groups have called on the Federal Deposit Insurance Corporation (FDIC) to withdraw its proposed rule on brokered deposits. The proposed rule, known as the Notice of Proposed Rulemaking (NPRM), aims to revise the definition of brokered deposits and the requirements for their reporting. The trade groups argue that the proposed rule is overly broad and could have unintended consequences for the banking industry.

The NPRM was published in June 2024 and seeks to redefine brokered deposits to include deposits placed through third-party intermediaries, such as online platforms. This redefinition could potentially capture deposits that are currently exempt from the definition. The trade groups are concerned that this could lead to increased regulatory burdens and compliance costs for banks, which could negatively impact their ability to offer competitive deposit products.

The trade groups have expressed several specific concerns about the proposed rule. They argue that the definition of brokered deposits is too vague and could lead to confusion and uncertainty. Additionally, they believe that the proposed rule could inadvertently capture deposits that are currently exempt, which could disrupt the banking industry and harm consumers.

The trade groups are urging the FDIC to withdraw the proposed rule and engage in further consultation with the industry to address these concerns. They are advocating for a more nuanced and targeted approach to regulating brokered deposits that balances the need for regulatory oversight with the need to maintain a competitive and efficient banking system.

The trade groups’ call to withdraw the proposed rule highlights the importance of careful consideration and consultation in the regulatory process. It underscores the need for regulatory agencies to work closely with the industries they regulate to ensure that new rules are effective and do not create unintended consequences.