Frank Keating, the president and CEO of the American Bankers Association, expressed support on Tuesday for an FDIC proposal that would keep deposit insurance within U.S. borders after U.K. regulators pushed for more depositor protections.
“We’re thankful that the FDIC views today’s vote as the first step in a process that will include an ongoing dialogue with our industry,” Keating said. “We hope the FDIC will work closely with the banking industry to develop a solution that is operationally efficient and prevents the FDIC from having to extend deposit insurance beyond U.S. borders.”
Under the rule proposed by the FDIC, American banks would be required to restructure their deposit-handling in U.K. branches to make deposits payable to both jurisdictions in order to avoid conflict with U.K. requests that depositors in the country would share equal risk with U.S. depositors if the institution should fail. The proposal is meant to align the new changes while ensuring that the FSA’s request does not result in FDIC deposit insurance being extended to the U.K.
Keating said, however, that more time is needed to address both U.S. and U.S. concerns regarding FDIC deposit insurance.
“It’s critical that we avoid balkanizing our smooth and efficient international banking system by creating disparate rules that make it harder for banks to serve customers that conduct business overseas,” Keating said. “More time is needed to develop a system that addresses the FDIC and U.K. banking regulators’ concerns while posing fewer operational burdens for U.S. financial institutions.”