On December 19, the FDIC announced an advance notice of proposed rulemaking (ANPR) requesting comments on the agency's brokered deposit and interest rate cap regulations. (See also FDIC FIL-87-2018.) These regulations were originally implemented in the late 1980s and early 1990s, and apply to less than well-capitalized insured depository institutions. According to the FDIC, there have been “significant changes in technology, business models, the economic environment, and products since the regulations were adopted.” Currently, Section 29 of the Federal Deposit Insurance Act restricts less than well-capitalized insured depository institutions from accepting brokered deposits, and places restrictions on interest rates that these insured depository institutions can offer. The ANPR includes a series of questions seeking feedback on a number of issues, including (i) ways in which the FDIC can improve the implementation of Section 29 “while continuing to protect the safety and soundness of the banking system;” (ii) whether the definition of a brokered deposit is too narrow or too broad; (iii) whether there have been specific changes within the financial services industry since the regulations were adopted that should be considered; (iv) whether there should be changes to the agency’s national rate calculation; and (v) how rates offered by internet or electronic-based financial institutions should be calculated.
The ANPR further notes that the Economic Growth, Regulatory Relief, and Consumer Protection Act created an exception from brokered deposit consideration for some reciprocal deposits. (See previous InfoBytes coverage here.)