Rate caps proposal for less-than-well-capitalized institutions in Federal Register Wednesday

A proposed rule that would revise and simplify the methodology for calculating rate caps for less-than-well-capitalized institutions is slated for publication Wednesday in the Federal Register, with comments due on or about Nov. 3.

Announced by the agency Aug. 20, the proposal would amend the methodology for calculating the national rate and national rate cap for specific deposit products. The FDIC said the national rate would be the weighted average of rates offered on a given deposit product by all reporting institutions weighted by domestic deposit share. The national rate cap would be set at the higher of either the 95th percentile of rates paid by insured depository institutions weighted by each institution’s share of total domestic deposits, or the proposed national rate (i.e., the weighted average) plus 75 basis points.

The proposal would allow less-than-well-capitalized institutions to offer up to 90% of the highest rate paid on a particular deposit product in the institution’s local market area, a change that would “greatly simplify the current local rate cap calculation and process,” the agency said.

Notice of proposed rule