The Federal Deposit Insurance Corp. on Thursday issued a rule that levels the playing field for state-chartered banks seeking to pay interest on demand deposits.
Starting April 1, when the Federal Reserve Board exempts banks that it supervises from rules banning interest on checking and other demand accounts, banks overseen by the FDIC immediately would get the same breaks.
The FDIC regulates state banks that do not belong to the Fed and insured branches of foreign banks. Banks supervised by the FDIC had complained that it takes the agency weeks to react to new breaks granted by the Fed, leaving them at a competitive disadvantage in the interim.
Some banks asked regulators to eliminate the prohibitions against interest on demand deposits, but the agency said that would require an act of Congress.