FDIC sets final brokered deposits rule under EGRRCPA; issues ANPR as part of comprehensive reg review

A final rule excepting a capped amount of some federally insured banks’ reciprocal deposits from treatment as brokered deposits is set to take effect 30 days after it’s published in the Federal Register, the federal bank deposit insurer said in a letter to supervised institutions Wednesday.

The final brokered deposits rule, issued by the Federal Deposit Insurance Corp. (FDIC), is one of two actions taken on brokered deposits during the agency’s open board meeting Tuesday. The other is an advance notice of proposed rulemaking (ANPR). The ANPR pertains to the agency’s regulatory approach to brokered deposits and interest rate caps for banks that are less than well-capitalized.

The final rule implements requirements of this year’s regulatory relief law, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). Adopted unchanged from the agency’s September proposal, the final rule excepts capped amounts of reciprocal deposits from being considered brokered deposits for institutions meeting minimum capital and exam rating requirements.

Under the final rule’s “general cap,” well-capitalized and well-rated institutions will not be 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. The rule also provides a “special cap” for institutions that are either not well-rated or not well-capitalized.

The FDIC says it received 12 comments from insured depository institutions, banking associations, bank service providers, and law firms writing on behalf of institutions; commenters generally supported the proposed rule.

The ANPR has a lengthy public comment period – 90 days – which begins upon its publication in the Federal Register. This notice is not a product of EGRRCPA; instead, it’s part of the FDIC’s effort to comprehensively review its regulations and policies, according to Wednesday’s Financial Institution Letter (FIL-87-2018).

The FDIC is embarking on a comprehensive review of its brokered deposits and interest rate regulations “in light of significant changes in technology, business models, the economic environment, and products” since these regs’ adoption, according to the notice for comment. “The FDIC is inviting comments on all aspects” of these regulations and will use the input received to determine “what actions may be warranted,” it said.

FIL-87-2018: Reciprocal Deposit Rulemaking and Request for Comments on Brokered Deposit and Interest Rate Restriction Issues

Final Rule: Limited Exception for a Capped Amount of Reciprocal Deposits from Treatment as Brokered Deposits

Advance Notice of Proposed Rulemaking Relating to Brokered Deposits

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