My latest article in American Banker explains how it was uninsured deposits, not brokered deposits, that led to 2023’s bank failures.
From the article:
With the growing competition from non-banks and very large regional and money center banks, it is becoming increasingly difficult for community banks to attract enough retail deposits to meet credit needs in their communities. Non-retail deposits, called either wholesale or brokered deposits, play a crucial role in providing community banks an additional source of deposit funding. Responsible use of these alternative sources of funding brings deposits into local markets, enabling community banks to offer much needed new loans.
The FDIC’s proposed additional restrictions on brokered deposits are a misstep in the wake of the recent regional bank failures. The proposed regulations address the wrong problem and would bring further harm to an already endangered and diminished community banking system.
Read the full article here.