THE LATEST
Congratulations to America’s New Industrial Banks
On March 18, 2020, the FDIC approved the applications submitted by Square Financial Services and Nelnet Bank for deposit insurance as new Industrial Loan Corporation (ILC) charters. Simultaneously, the Utah Department of Financial Institutions approved the industrial bank charter applications. (ILCs are also referred to as industrial banks.)
“Square and Nelnet are great additions to the U.S. banking sector. We congratulate them for succeeding through the rigorous federal and state application process,” said Frank Pignanelli, Executive Director of the National Association of Industrial Bankers.
UCFS Brokered Deposits Report Released
James R. Barth and Yanfei Sun of Auburn University conducted a study for the Utah Center for Financial Services (UCFS) examine brokered deposits in the context of their origin, regulatory history, use, and performance.
THE GOLDEN APPLE
Gray Robinson’s weekly report on public policy matters. An indispensable way to keep up with what’s going on in Washington.
The Golden Apple for January 15, 2021
The Golden Apple for January 8, 2021
The Golden Apple for December 23, 2020
The Golden Apple for December 11, 2020
FDIC – It’s Time to Update the Definition of Brokered Deposits
The NAIB is urging the FDIC to review the exclusion of all fully-insured brokered deposits from the definition of the term “core deposit” used in the Uniform Bank Performance Report (“UBPR”).
The exclusion of brokered deposits from the definition of core deposits lacks foundation and can be easily remedied by the FDIC. As the definition of a “core” deposit is not in a regulation, but rather a financial report, such a change would not require publication and solicitation of comments.
IN THE NEWS
Update on Meeting with FDIC and Federal Reserve
Frank Pignanelli updates the UAFS and NAIB on the recent efforts of the Industrial Bank community in Washington, DC.
Banner year for de novos
Groups hoping to open new banks hit their stride in 2018.
Through Dec. 13, the Federal Deposit Insurance Corp. had approved 14 bank applications, with seven more pending. In comparison, the agency signed off on 10 total charters during the prior two years.
Jelena McWilliams, the new FDIC chairman, has signaled that the agency will be more supportive of de novo banks. The FDIC, for instance, recently announced that it is seeking public comment to improve the application process.
Brokered deposits’ bad rap is undeserved
In advance of an anticipated proposal by the Federal Deposit Insurance Corp. to revise its regulations on brokered deposit, former FDIC Chairman Bill Isaac has staked out a strong position in a recent op-ed, suggesting that easing rules for deposit brokers threatens a repeat of the savings and loan debacle. He later posted a comment to a subsequent op-ed summing up his position this way: “The FDIC should be concerned about third parties bundling deposits in a manner that eliminates the deposit insurance ceiling and selling those funds to the highest bidders. Community bankers beware!”
FDIC’s Jelena McWilliams cautious about nontraditional bank owners
Since arriving at the FDIC, Jelena McWilliams has signaled a willingness to move more quickly on industrial loan company applications than the agency has in the past. But asked her thoughts on letting fintech companies like Social Finance and larger firms such as Apple access to the banking system, McWilliams said regulators should not let down their guard.
