An interim final rule in effect now and out for comment until Oct. 1 qualifies more institutions to use a limited exemption – now also expanded – that permits excepting a portion of reciprocal deposits from brokered deposits reporting.
Issued by notation vote Aug. 27 by the Federal Deposit Insurance Corp. (FDIC) Board, the interim final rule implements changes to section 29 of the Federal Deposit Insurance Act under the 21st Century ROAD to Housing Act, enacted in July.
The interim rule, published this week in the Federal Register, defines an “agent institution” qualified to use the exemption as one having a CAMELS rating of 1, 2, or 3 and which is well-capitalized. Previously, the exemption was allowed for institutions whose recent examinations showed they had a condition of “outstanding” or “good” (interpreted by the agency to include CAMELS 1 and 2 institutions), among other factors.
The rule also raises the general cap for reciprocal deposits. Previously, the FDI Act allowed an agent institution to except an amount equal to the lesser of $5 billion or 20% of the institution’s total liabilities from brokered deposits reporting. The interim final rule revises the amount and calculation of the general cap so that the amount of reciprocal deposits allowed for any institution is $30 billion, which would be the general cap for an institution with $96.33 billion or more in total liabilities (provided it is not limited to the rule’s special cap, which applies for an institution that has had a rating or capital downgrade).
Other changes to the rules are aimed at simplifying compliance, the agency said.
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