A proposed rule implementing recent regulatory reform law changes in the regulatory treatment of some brokered deposits at banks was issued Thursday by the Federal Deposit Insurance Corp. (FDIC) for a 30-day public comment period.
The proposed rule, implementing Section 202 of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), excepts some reciprocal deposits from being considered brokered deposits for some insured institutions. The statutory provisions took effect May 24, the date EGRRCPA was signed into law.
Under the proposal, FDIC says well-capitalized and well-rated institutions are not required to treat reciprocal deposits as brokered deposits up to the lesser of 20% of their total liabilities or $5 billion. The agency says that under certain circumstances, institutions that are not both well capitalized and well rated may also exclude reciprocal deposits from their brokered deposits.
This is the first of a two-part effort to revisit the agency’s brokered deposit rules, the agency said.
“I am currently undertaking a comprehensive review of FDIC regulations and policies,” FDIC Chairman Jelena McWilliams said in a statement. “A key part of this process will be a reassessment of the agency’s brokered deposits regulations and FAQs. Since the rules were put in place, the industry has seen significant changes in technology, business models, and product types, and later this year we will ask for public comment on how best to update the rules to reflect such changes.”
Thursday’s proposal also includes conforming amendments to the FDIC’s regulations governing deposit insurance. FDIC said it plans to seek comments later this year on its overall brokered deposit and rate cap regulations.
Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register, FDIC said.