The Federal Deposit Insurance Corporation (FDIC) has proposed a rulemaking on brokered deposits, which has sparked significant opposition from various trade groups. These groups, including the American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), and the National Association of Federal Credit Unions (NAFCU), have collectively called on the FDIC to withdraw the proposed rulemaking.

The proposed rule, known as the Brokered Deposit NPRM, aims to revise the FDIC’s regulations on brokered deposits. These deposits are made through intermediaries, such as brokers, who solicit deposits from the public on behalf of banks. The current regulations were established in 1983 and have not been significantly updated since then.

The trade groups argue that the proposed rule is overly broad and could lead to unintended consequences for the banking industry. They claim that the rule could restrict the ability of banks to attract deposits, particularly from small businesses and individuals. This, in turn, could negatively impact the overall financial health of the banking system.

The groups also express concerns that the proposed rule could create a competitive disadvantage for community banks and credit unions, which rely heavily on local deposits. They suggest that the rule could inadvertently favor larger banks that have more resources to navigate complex regulatory environments.

The trade groups are urging the FDIC to reconsider the proposed rule and address the potential risks and unintended consequences it may pose. They are advocating for a more nuanced approach that balances the need for regulatory oversight with the need for flexibility in the banking industry.

The FDIC’s decision on the proposed rule will have significant implications for the banking sector, potentially affecting the availability and cost of deposits, as well as the overall stability of the financial system.