‘Hot Money’ Deposits Get Tougher Treatment in New FDIC Plan (2)

The Federal Deposit Insurance Corp. unveiled a measure to strengthen regulation of US banks’ brokered deposits, the government’s latest response to last year’s industry turmoil.

Known as hot money, the funds collected by brokers surged past $1 trillion in 2023 — a year that saw three of the four largest bank failures in US history. The influx helped lenders compensate for some of the hundreds of billions of deposits that rushed out their doors.

Regulators have long been concerned about brokered deposits because troubled banks sometimes use them as a quick fix to bolster their books. But the deposits are ...