On November 4, BPI submitted a comment letter to the FDIC on its proposed revisions to regulations restricting less than well-capitalized institutions from offering interest rates that significantly exceed the prevailing rates in their normal market areas or the FDIC’s “national rate cap” for out-of-area-deposits. BPI recommends an alternative to the proposal’s revised national rate calculation, arguing that this alternative would better reflect the market in different economic cycles, and advancements in online and digital banking, and account for a variety of business segments. The letter further recommends changes to the FDIC’s supervisory practices to prevent the treatment of high-interest rates as a proxy for liquidity risk, noting that in this regard the national rate calculation negatively affects even healthy, well-capitalized institutions.
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