On September 13, the Bank Policy Institute sent a letter to the House Financial Services Committee in support of H.R. 6158, the Brokered Deposit Affiliate-Subsidiary Modernization Act. The bill would importantly clarify that the definition of “deposit broker” does not extend to bank affiliates and subsidiaries that, as an incident to their business, assist customers who wish to place their deposits at affiliated banks. This clarification is needed to ensure that such deposits are not actively discouraged by Federal law, prohibited in cases where banks experience financial difficulties, or charged higher deposit insurance assessments. While we believe that existing law does not reach such deposits, the FDIC has failed to recognize this appropriate conclusion in supervisory guidance and practice. While we have other concerns related to the FDIC’s stance regarding brokered deposits, this legislation takes an important step towards rationalizing the regulatory framework.
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