The American Fintech Council (AFC) has called on the Federal Deposit Insurance Corporation (FDIC) to withdraw its proposed rulemaking on brokered deposits. The AFC, which represents fintech companies and innovative banks, argues that the rule could negatively impact consumers, stifle competition, and hinder financial innovation.

In a comment letter submitted to the FDIC, the AFC expressed concerns about the rule's analysis of deposit stability and its potential market and consumer harm. The council emphasized the need for regulations that support financial inclusion and stability.

Phil Goldfeder, CEO of AFC, stated: "The FDIC’s proposed rule threatens to undo years of progress in creating a more inclusive, innovative, and consumer-centered financial system." He added that it would harm underserved communities and weaken the resilience of the financial services industry.

The AFC argues that deposits from bank-fintech partnerships are stable and well-documented. These deposits serve as primary accounts for consumers' everyday banking needs. The council believes these deposits pose no increased risk compared to traditional core deposits.

The organization also warned against redefining brokered deposits and removing exemptions. Such changes could undermine competition in financial services, disproportionately affecting underserved communities who rely on affordable products from bank-fintech partnerships.

Ian P. Moloney, SVP at AFC, said: "The technological competition that has been a hallmark of bank-fintech partnerships...would be severely stymied if the Proposed Rule is finalized."

AFC urges the FDIC to focus on addressing real risks while supporting responsible innovation. They recommend withdrawing the proposed rule due to its oversight of issues like social media's role in deposit volatility.

As a standards-based organization representing major fintech firms and banks offering embedded finance solutions, AFC aims to promote an inclusive financial system through responsible innovation and sound public policy.