On January 27, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) proposed for comment amendments to regulatory interest rate restrictions that apply to insured depository institutions that are not “well capitalized.” The basis for such interest rate restrictions is found in the Prompt Corrective Action statutes and regulations enforced by the FDIC. Pursuant to the proposed rule, affected insured depository institutions would generally be permitted to offer the “national rate” of interest plus 75 basis points. According to the proposal, the “national rate” would be defined, for deposits of similar size and maturity, as an average of rates paid by all insured depository institutions and branches for which data are available to the FDIC. Where the “national rate” does not represent the prevailing rate in a particular market, the depository institution would be permitted to offer the prevailing rate plus 75 basis points.

According to the FDIC’s press release, the proposed rule applies only to a “small minority” of banks that are less than well capitalized. It further states that, as of the third quarter 2008, there were 154 banks that reported being less than well capitalized out of more than 8300 banks nationwide.  

Comments are due 60 days after publication in the Federal Register.