On January 5, in its second Financial Institution Letter of 2015, the Federal Deposit Insurance Corporation (FDIC) released guidance in the form of frequently asked questions (FAQs) with respect to identifying, accepting and reporting brokered deposits.
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“Section 29 of the Federal Deposit Insurance Act (12 U.S.C. § 1831f) and Section 337.6 of the FDIC’s regulations (12 C.F.R. § 337.6) restrict the acceptance of brokered deposits by FDIC-insured depository institutions (IDIs) that are not well capitalized. All insured depository institutions (including those that are well capitalized) must report brokered deposits in their Consolidated Reports of Condition and Income.”
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“The FDIC has explained the requirements for identifying, accepting, and reporting brokered deposits in published advisory opinions and in the Study on Core Deposits and Brokered Deposits issued in July 2011. Nevertheless, questions continue to arise regarding whether certain types of deposits are considered brokered deposits….These FAQs (with answers) will be periodically updated on the FDIC’s Web site.”
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“The FAQs cover various topics, such as identifying brokered deposits, accepting deposits, listing services, interest rate restrictions, and other brokered deposit-related matters.”
In its cover to the FAQs, the FDIC explained that “[t]he term ‘deposit broker’ is broadly defined as ‘any person engaged in the business of placing deposits, or facilitating the placement of deposits, of third parties with insured depository institutions or the business of placing deposits with insured depository institutions for the purpose of selling interests in those deposits to third parties.’ If a deposit is accepted through a ‘deposit broker,’ the deposit is a brokered deposit.”
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