Public Policy Perspective

The Threat to Bank Deposits

A 2020 change to the FDIC rules made partnerships between banks and fintech companies more valuable, as it allowed more deposits to be classified as “core” rather than “brokered.” However, the new brokered deposit rule, proposed in 2024, would once again change Section 29 of the FDI Act. Unlike the 2020 rule, it would broaden the definition of “deposit brokers” and eliminate or change some popular exceptions.

Read ADM’s full FDIC response to the proposed rule change, here.

 

Key Takeaways

Negative Impact on Community Banks & Local Economies

Overreach in Defining “Deposit Brokers”

Disproportionate Burden on Small Institutions

The Proposed Rulemaking would have significant and negative impacts on financial institutions (particularly community banks), third-party service providers, and customers, with no clear record that the revisions would have any corresponding benefits to safety and soundness.

Adrienne Thorson
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