An advance notice of proposed rulemaking (ANPR) on brokered deposits and interest rate caps by the Federal Deposit Insurance Corp. (FDIC) is out for a 90-day public comment period that ends May 7, according to a notice in Wednesday’s Federal Register.
The ANPR, announced by the federal deposit insurer in December, addresses limits applicable to banks that are less than well-capitalized.
With its ANPR, the FDIC is inviting input on all aspects of its brokered deposits regulation and interest rate restrictions, especially the following:
- Are there ways the FDIC can improve its implementation of Section 29 of the Federal Deposit Insurance (FDI) Act while continuing to protect the safety and soundness of the banking system? If so, how? [Section 29 sets brokered deposits restrictions.]
- Are there types of deposits that are currently considered brokered that should not be considered brokered? If so, please explain why.
- Are there types of deposits that are currently not considered brokered that should be considered brokered? If so, please explain why.
- Are there specific changes that have occurred in the financial services industry since the brokered deposits regulation was adopted that the FDIC should be cognizant of as it reviews the regulation? If so, please explain.
- Do institutions currently have sufficient clarity regarding who is or is not a deposit broker and what is or is not a brokered deposit? Are there ways the FDIC can provide additional clarity through updates to the brokered deposits regulation, consistent with the statute and the policy considerations described above?
- Are there areas where changes might be warranted but could not be effectuated under the current statute? Are there any statutory changes that warrant consideration from Congress?
- Should the FDIC make changes to the Call Report instructions so that the agency can gather more granular information about types of brokered deposits?
- In general, the FDIC welcomes any additional data or market information related to brokered deposits, particularly related to those types of brokered deposits that are not specifically reported by institutions in their Call Reports (e.g., Master Certificates of Deposits held in the name of DTC and deposits placed through unaffiliated sweep programs).
Interest rate restrictions:
- Are there alternatives that the FDIC should consider in addressing Section 29’s interest rate restrictions for less than well capitalized institutions?
- Should the methodology used to calculate the “national rate” be changed? If so, how?
- Should there remain a presumption that the prevailing rate in any “market area” is the national rate? If not, how should the FDIC define the “normal market area”?
- Should the amount of the rate cap, currently 75 basis points over either the national rate or the prevailing market rate, be revised? If so, how?
- How should deposits with promotional or special features be treated with respect to the national rate or the prevailing market rate?
- How should the rates offered by internet-based or electronic commerce- based institutions be calculated?
This ANPR is unrelated to a capped deposit amounts exception published last year as part of implementation for the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155).