FDIC brokered deposits proposal in Federal Register, comments due Oct. 26

Proposed rule changes announced by the Federal Deposit Insurance Corp. (FDIC) earlier this month on the treatment of banks’ reciprocal deposits under the recently enacted regulatory reform law are in the Sept. 26 Federal Register. FDIC is accepting comments on the proposal until Oct. 26.

This is the first of a two-part effort to revisit the agency’s brokered deposit rules, the agency says.

The changes amend the FDIC’s current rules on reciprocal deposits, as well as the agency’s deposit insurance assessment regulations, to satisfy Section 202 of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA). This section, which took effect upon the enactment of EGRRCPA May 24, excepts capped amounts of reciprocal deposits from being considered brokered deposits for institutions meeting minimum capital and exam rating requirements.

Under the proposal, FDIC says well-capitalized and well-rated institutions are not required to treat reciprocal deposits – generally speaking, deposits obtained from a deposit placement network in exchange for funds placed into the network – as brokered deposits up to the lesser of 20% of their total liabilities or $5 billion. Other institutions may also exclude some reciprocal deposits from “brokered” deposits under certain circumstances, FDIC says.

The FDIC is seeking comments on how institutions may be affected by the proposed rule changes.

FDIC also says it plans to seek comments later this year on its overall brokered deposit and rate cap regulations.

Notice of proposed rulemaking and request for comments (Federal Register notice)