Ian P. Moloney, Senior Vice President and Head of Policy and Regulatory Affairs at the American Fintech Council (AFC), issued a statement on August 2, 2024, expressing concerns over the Federal Deposit Insurance Corporation’s (FDIC) proposed rulemaking on brokered deposits.
"We have serious concerns with the Federal Deposit Insurance Corporation’s (FDIC) decision to issue its proposed rulemaking on brokered deposits and the amendments found therein," Moloney stated.
The AFC has consistently challenged the FDIC's cautious stance towards innovation. According to Moloney, "The agency’s lack of engagement has resulted in their misunderstanding and misapplication of the actual risks associated with fintech companies and their bank partners engaging in deposit-responsible relationships." He further noted that this proposed rulemaking appears to be an effort to hinder innovation within the financial services ecosystem. "The agency’s rationale to justify the changes put forth in the proposed rulemaking represents limited and idiosyncratic examples of innovation gone awry and is not representative of the broader bank-fintech market nor proportionate to the significant changes proposed in the new rule."
Moloney emphasized that markets function best with settled expectations. He criticized the FDIC for seeking amendments less than five years after finalizing its existing brokered deposits rule, which had provided clarity to banks, fintech partners, and outlined a waiver application process. The new amendments are seen as detrimental by increasing regulatory burdens and complicating processes for determining which arrangements fall under the rule.
"Innovative banks and their fintech partners have developed a wide array of services to help historically underserved communities and improve competition in the broader financial services industry," Moloney said regarding developments since 2020. He argued that undoing these reforms without strong evidence would undermine service offerings provided through responsible bank-fintech partnerships.
Moloney concluded by reaffirming AFC's commitment: "AFC remains committed to working with the FDIC to ensure that any rulemaking on brokered deposits continues to maintain the resilience of the banking system while also ensuring that historically-underserved consumers continue to be served."