FDIC Announces New Resources For Brokered Deposits Regulation

Ballard Spahr LLP

Ballard Spahr LLP

On April 1, 2021, the FDIC’s final rule issued in December 2020 revising its brokered deposits regulation became effective.  The full compliance date for the final rule is January 1, 2022.  The rule established a new framework for analyzing whether deposits made through deposit arrangements qualify as “brokered deposits” and amended the methodology for calculating the interest rate restrictions that apply to less than well capitalized insured depository institutions.

The FDIC issued a new Financial Institution Letter (FIL-23-2021) last week in which it announced that, to facilitate implementation of the final rule, it has added a Brokered Deposits webpage to the Banker Resource Center on its website.  The information on the webpage about the final rule includes filing instructions for the notice requirement and application process established by the final rule.

The final rule excludes from the definition of  a “deposit broker” agents or nominees whose primary purpose is not the placement of funds with IDIs (Primary Purpose Exception) and identifies 14 specific business relationships as meeting the Primary Purpose Exception (Designated Exceptions).  It created an application process that an agent or nominee that does not meet one of the Designated Exceptions can use to seek a written determination from the FDIC that a specific deposit-placement arrangement qualifies for the Primary Purpose Exception.  The final rule also requires a third party relying on either of two Designated Exceptions (referred to as the “25 percent test” and the “enabling transactions test”) to provide written notice to the FDIC.  The FDIC indicated in its announcement that it plans to make available a listing of entities that have submitted notices.

The new Brokered Deposits webpage also includes “Questions and Answers Related to the Brokered Deposits Rule” (which the FDIC intends to periodically update), a Small Entity Compliance Guide, and national rates and rate caps (applicable to less than well capitalized institutions). 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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