Joint Trades Letter to the FDIC on the Notice of Proposed Rulemaking on Recordkeeping for Custodial Accounts

Re: Recordkeeping for Custodial Accounts (RIN 3064-AG07)

Ladies and Gentlemen:

The Bank Policy Institute, American Bankers Association, and Association of Global Custodians, Americas Focus Committee are writing in response to the Federal Deposit Insurance Corporation's Notice of Proposed Rulemaking on Recordkeeping for Custodial Accounts (the "proposal"). Motivated by the bankruptcy of Synapse Financial Technologies, Inc., a nonbank middleware provider, and the resultant inability of consumers to access their deposited funds due to Synapse's lack of adequate ledgering, the proposal seeks to impose new recordkeeping requirements on banks. While we agree with the FDIC that the inability to access deposited funds due to recordkeeping failures by nonbank entities is a problem that must be addressed, we disagree with the approach taken in the proposal, which is overly broad in scope and which inappropriately seeks to make banks responsible for business deficiencies observed at nonbank entities. If finalized, the proposal would result in significant and adverse unintended consequences for banks' ability to serve their customers and, furthermore, would not optimally mitigate the risks the FDIC seeks to address through it. For the reasons discussed in greater detail herein, the proposal should therefore be withdrawn, and the FDIC and other relevant policymakers should refocus their efforts to prevent future harm, like that caused by Synapse's bankruptcy, on the nonbank entities that are most responsible for and best positioned to address the underlying causes of such harm. The FDIC should not continue to attempt to indirectly address concerns at nonbank entities by directly regulating all banks.

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Joint Trades Letter to the FDIC on the Notice of Proposed Rulemaking on Recordkeeping for Custodial Accounts

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Joint Trades Letter to the FDIC on the Notice of Proposed Rulemaking on Recordkeeping for Custodial Accounts

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