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WASHINGTON – The American Securities Association (ASA) this week submitted a comment letter urging the Federal Deposit Insurance Corporation (FDIC) to abandon its brokered deposits rule.
“The Proposal is unsupported by any evidence of customer harm or increased risk of market failure, and if adopted would adversely affect several institutions that have relationships with banks – including broker-dealers and investment advisers – and the customers of those institutions,” said ASA President and CEO Chris Iacovella. “Accordingly, we call on the FDIC to abandon this Proposal in its entirety.”
In the letter, ASA outlined how the Proposal, if implemented, could have several consequences:
Reduced consumer choice: The Proposal needlessly disrupts an already properly functioning marketplace. By limiting the ability of broker-dealers and investment advisers to offer cash management services, the Proposal could reduce options available to consumers for managing their cash, finances, investment, and payment preferences in a holistic way.
Increased systemic risk: By attempting to limit brokered deposits, the Proposal could concentrate deposits in fewer institutions, which would increase systemic risk. This was not addressed in the Proposal and by itself should give the FDIC pause.
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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.
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