WASHINGTON - The Federal Deposit Insurance Corp. on Tuesday said state-chartered banks that are not members of the Federal Reserve no longer will have to disclose how much they are paid by the third-party firms handling securities transactions.
Currently, these banks - which the FDIC regulates - must tell customers how much the third-party brokers are paying the institution for the business.
The final rule will be effective upon publication in the Federal Register, which should occur soon. The new rule does not eliminate the requirement, but permits banks to avoid the reporting by seeking a waiver.
The move puts state-chartered institutions on par with national banks, which have been exempt from the reporting requirement since 1979. The Fed still requires its members to disclose payments from brokerage firms.
Bankers have complained that compliance with the rule was extremely difficult, and even impossible in some cases, because brokerage firms do not keep records of sales charges.
Fees are hard to calculate, bankers say, because they typically compensate brokerage firms by offering discounts on rented space within the bank. The discounts are based on sales volume over time. As a result, the compensation banks receive for a particular transaction is hard to determine.
Diane Casey, executive director of the Independent Bankers Association of America, said the waiver is good for everyone. The information previously disclosed was useless to consumers, she said.
In a letter last summer, the IBAA and the American Bankers Association asked the FDIC to waive the rule. The requirement was unfair to state banks regulated by the agency, it said, because national banks did not have to make the disclosure.
