The FDIC Board is considering today a request for information on the composition and characteristics of deposits, particularly uninsured deposits and concentrations of deposit types, which could affect the behavior of depositors in times of stress. Runs of uninsured deposits directly contributed to the failures of Silicon Valley Bank and Signature Bank in March 2023 and the subsequent failure of First Republic Bank, all large regional banks. These runs were exacerbated by each bank’s heavy reliance on uninsured deposit funding and concentrations in the depositor base, among other factors.
While banks are required to provide certain data on deposit liabilities on the Call Report, they do not report comprehensive data on the composition of insured and uninsured deposits nor the characteristics of those deposits. As a result, the FDIC does not have historical data on banking industry trends for different types of insured and uninsured deposits, including how depositors would behave in times of stress. This request seeks information on the characteristics that could affect the stability and franchise value of different types of deposits.
The request also seeks comment on whether more detailed or more frequent reporting on these characteristics or types of deposits could inform a number of policy objectives, including enhancing offsite risk and liquidity monitoring. A bank’s liability structure can reflect its risk-taking behavior, and information about an institution’s funding base, including data on deposits, is important in evaluating liquidity risk and interest rate risk.
As deposit insurer, with responsibility for resolving failed insured depository institutions and managing the Deposit Insurance Fund, or DIF, the FDIC would benefit from more granular, and more frequent, reporting of deposits. Deposit data are important for receivership purposes, since the presence of deposit insurance coverage has direct implications for the costs associated with the resolution of a failed institution. Data on deposits also inform the FDIC’s management of the DIF, which is used to insure deposits, protect the depositors of insured banks, and to resolve failed banks. In an effort to better inform analysis of deposit balance trends, the request includes questions on how banks measure or evaluate the stability of different types of deposits, and on what additional data, including more granular or more frequently reported data, should be considered for collection.
Other regulators and stakeholders also may benefit from that additional information. The request includes questions on whether more detailed or more frequent reporting on characteristics of or types of deposits could improve the accuracy and transparency of data reported on the Call Report or other regulatory reports, to better inform analysts and the general public.
Additional data on deposits would also inform analysis of the benefits and costs associated with additional deposit insurance coverage for certain types of deposits. In May 2023, the FDIC published a comprehensive report entitled, “Options for Deposit Insurance Reform,” outlining three options for Congress to consider to reform the nation’s deposit insurance system. 1 To inform discussion around any potential increases in deposit insurance coverage, the request includes questions on those options, including on the definition of “business payment accounts” and any challenges associated with reporting new deposit data items on accounts linked to payroll, vendors, or operations.
I would like to thank FDIC staff for their thoughtful work in developing this request. I support publication of this Request for Information on Deposits for public comment, and strongly encourage comments from all interested parties. I look forward to receiving thoughtful public comments on the request.
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Options for Deposit Insurance Reform, FDIC, May 1, 2023. Available at: https://www.fdic.gov/analysis/options-deposit-insurance-reforms/