FDIC Law, Regulations, Related Acts
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1000 - Federal Deposit Insurance Act
SEC. 29. BROKERED DEPOSITS.
(a) In General.--An insured depository institution that is
not well capitalized may not accept funds obtained, directly or
indirectly, by or through any deposit broker for deposit into 1 or more
deposit accounts.
[Codified to 12 U.S.C. 1831f(a)]
[Source: Section 2[29(a)] of the Act of September 21, 1950 (Pub.
L. No. 797), effective September 21, 1950, as added by section 224(a)
of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103
Stat. 273), effective August 9, 1989; as amended by section 301(a)(1)
of title III of the Act of December 19, 1991 (Pub. L. No. 102--242; 105
Stat. 2343), effective December 19, 1991; section 1605(a)(1)(A) of
title XVI of the Act of October 28, 1992 (Pub. L. No. 102--550; 106
Stat. 4085), effective December 19, 1991]
(b) Renewals and Rollovers Treated as Acceptance of
Funds.--Any renewal of an account in any troubled institution and
any rollover of any amount on deposit in any such account shall be
treated as an acceptance of funds by such troubled institution for
purposes of subsection (a).
[Codified to 12 U.S.C. 1831f(b)]
[Source: Section 2[29(b)] of the Act of September 21, 1950 (Pub.
L. No. 797), effective September 21, 1950, as added by section 224(a)
of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103
Stat. 273), effective August 9, 1989]
(c) Waiver Authority.--The Corporation may, on a
case-by-case basis and upon application by an insured depository
institution which is adequately capitalized (but not well
capitalized), waive the applicability of subsection (a) upon a finding
that the acceptance of such deposits does not constitute an unsafe or
unsound practice with respect to such institution.
[Codified to 12 U.S.C. 1831f(c)]
[Source: Section 2[29(c)] of the Act of September 21, 1950 (Pub.
L. No. 797), effective September 21, 1950, as added by section 224(a)
of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103
Stat. 273), effective August 9, 1989; as amended by section 301(a)(2)
of title III of the Act of December 19, 1991 (Pub. L. No. 102--242; 105
Stat. 2343), effective December 19, 1991; section 1605(a)(1)(B) of
title XVI of the Act of October 28, 1992 (Pub. L. No. 102--550; 106
Stat. 4085), effective December 19, 1991]
(d) Limited Exception for Certain Conservatorships.--In
the case of any insured depository institution for which the
Corporation has been appointed as conservator, subsection (a) shall not
apply to the acceptance of deposits (described in such subsection) by
such institution if the Corporation determines that the acceptance of
such deposits--
(1) is not an unsafe or unsound practice;
(2) is necessary to enable the institution to meet the demands of
its depositors or pay its obligations in the ordinary course of
business; and
(3) is consistent with the conservator's fiduciary duty to
minimize the institution's losses.
Effective 90 days after the date on which the institution was placed
in conservatorship, the institution may not accept such deposits.
[Codified to 12 U.S.C. 1831f(d)]
[Source: Section 2[29(d)] of the Act of September 21,
1950 (Pub. L. No. 797), effective September 21, 1950, as added by
section 224(a) of title II of the Act of August 9, 1989 (Pub. L. No.
101--73; 103 Stat. 273), effective August 9, 1989; as amended by
section 301(a)(3) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2343), effective December 19,
1991]
(e) Restriction on interest rate paid.--
(1) DEFINITIONS.--In this subsection--
(A) the terms "agent institution", "reciprocal
deposits", and "well capitalized" have the meanings given
those terms in subsection (i); and
(B) the term "covered insured depository institution" means
an insured depository institution that--
(i) under subsection (c) or (d), accepts funds obtained, directly
or indirectly, by or through a deposit broker; or
(ii) while acting as an agent institution under subsection (i),
accepts reciprocal deposits while not well capitalized.
(2) PROHIBITION.--A covered insured depository
institution may not pay a rate of interest on funds or reciprocal
deposits described in paragraph (1) that, at the time that the funds or
reciprocal deposits are accepted, significantly exceeds the limit set
forth in paragraph (3).
(3) LIMIT ON INTEREST RATES.--The limit on the rate of
interest referred to in paragraph (2) shall be--
(A) the rate paid on deposits of similar maturity in the normal
market area of the covered insured depository institution for deposits
accepted in the normal market area of the covered insured depository
institution; or
(B) the national rate paid on deposits of comparable maturity, as
established by the Corporation, for deposits accepted outside the
normal market area of the covered insured depository institution.
[Codified to 12 U.S.C. 1831f(e)]
[Source: Section 2[29(e)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 301(a)(4) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2343), effective December 19, 1991; section
202(b) of title II of the Act of May 24, 2018 (Pub. L. No. 115--174;
132 stat. 1307), effective May 24, 2018]
(f) Additional Restrictions.--The Corporation may impose,
by regulation or order, such additional restrictions on the acceptance
of brokered deposits by any institution as the Corporation may
determine to be appropriate.
[Codified to 12 U.S.C. 1831f(f)]
[Source: Section 2[29(e)] of the Act of September 21, 1950 (Pub.
L. No. 797), effective September 21, 1950, as added by section 224(a)
of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103
Stat. 274), effective August 9, 1989; as redesignated by section
301(a)(5) of title III of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2344), effective December 19,
1991]
(g) Definitions Relating to Deposit Broker.--
(1) DEPOSIT BROKER.--The term "deposit broker"
means--
(A) 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; and
(B) an agent or trustee who establishes a deposit account to
facilitate a business arrangement with an insured depository
institution to use the proceeds of the account to fund a prearranged
loan.
(2) EXCLUSIONS.--The term "deposit broker" does
not include--
(A) an insured depository institution, with respect to funds
placed with that depository institution;
(B) an employee of an insured depository institution, with
respect to funds placed with the employing depository institution;
(C) a trust department of an insured depository institution, if
the trust in question has not been established for the primary purpose
of placing funds with insured depository institutions;
(D) the trustee of a pension or other employee benefit plan, with
respect to funds of the plan;
(E) a person acting as a plan administrator or an investment
adviser in connection with a pension plan or other employee benefit
plan provided that that person is performing managerial functions with
respect to the plan;
(F) the trustee of a testamentary account;
(G) the trustee of an irrevocable trust (other than one described
in paragraph (1)(B)), as long as the trust in question has not been
established for the primary purpose of placing funds with insured
depository institutions;
(H) a trustee or custodian of a pension or profitsharing plan
qualified under section 401(d) or 430(a) of the Internal Revenue Code
of 1986; or
(I) an agent or nominee whose primary purpose is not the
placement of funds with depository institutions.
(3) INCLUSION OF DEPOSITORY INSTITUTIONS ENGAGING IN CERTAIN
ACTIVITIES.--Notwithstanding paragraph (2), the term "deposit
broker" includes any insured depository institution that is not well
capitalized (as defined in
section
38), and any employee of such institution, which engages,
directly or indirectly, in the solicitation of deposits by offering
rates of interest which are significantly higher than the prevailing
rates of interest on deposits offered by other insured depository
institutions in such depository institution's normal market area.
(4) EMPLOYEE.--For purposes of this subsection, the term
"employee" means any employee--
(A) who is employed exclusively by the insured depository
institution;
(B) whose compensation is primarily in the form of a salary;
(C) who does not share such employee's compensation with a
deposit broker; and
(D) whose office space or place of business is used exclusively
for the benefit of the insured depository institution which employs
such individual.
[Codified to 12 U.S.C. 1831f(g)]
[Source: Section 2[29(f)] of the Act of September 21, 1950 (Pub.
L. No. 797), effective September 21, 1950, as added by section 224(a)
of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103
Stat. 274), effective August 9, 1989; as redesignated by section
301(a)(4) of title III of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2344), effective December 19, 1991; as amended by
section 337 of title III of the Act of September 23, 1994 (Pub. L. No.
103--325; 108 Stat. 2235), effective September 23,
1994]
(h) Deposit Solicitation Restricted.--An insured
depository institution that is undercapitalized, as defined in
section 38, shall not solicit
deposits by offering rates of interest that are significantly higher
than the prevailing rates of interest on insured deposits--
(1) in such institution's normal market areas; or
(2) in the market area in which such deposits would otherwise be
accepted.
[Codified to 12 U.S.C. 1831f(h)]
[Source: Section 2[29(h)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 301(c) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2345), effective December 19, 1991]
(i) Limited exception for reciprocal deposits.--
(1) IN GENERAL.--Reciprocal deposits of an agent
institution shall not be considered to be funds obtained, directly or
indirectly, by or through a deposit broker to the extent that the total
amount of such reciprocal deposits does not exceed the lesser of--
(A) $5,000,000,000; or
(B) an amount equal to 20 percent of the total liabilities of the
agent institution.
(2) DEFINITIONS.--In this subsection:
(A) AGENT INSTITUTION.--The term "agent
institution" means an insured depository institution that places a
covered deposit through a deposit placement network at other insured
depository institutions in amounts that are less than or equal to the
standard
maximum deposit insurance amount, specifying
the interest rate to be paid for such amounts, if the insured
depository institution--
(i)(I) when most recently examined under section 10(d) was found
to have a composite condition of outstanding or good; and
(II) is well capitalized;
(ii) has obtained a waiver pursuant to subsection (c); or
(iii) does not receive an amount of reciprocal deposits that
causes the total amount of reciprocal deposits held by the agent
institution to be greater than the average of the total amount of
reciprocal deposits held by the agent institution on the last day of
each of the 4 calendar quarters preceding the calendar quarter in which
the agent institution was found not to have a composite condition of
outstanding or good or was determined to be not well capitalized.
(B) COVERED DEPOSIT.--The term "covered deposit"
means a deposit that--
(i) is submitted for placement through a deposit placement
network by an agent institution; and
(ii) does not consist of funds that were obtained for the agent
institution, directly or indirectly, by or through a deposit broker
before submission for placement through a deposit placement network.
(C) DEPOSIT PLACEMENT NETWORK.--The term "deposit
placement network" means a network in which an insured depository
institution participates, together with other insured depository
institutions, for the processing and receipt of reciprocal deposits.
(D) NETWORK MEMBER BANK.--The term "network member
bank" means an insured depository institution that is a member of a
deposit placement network.
(E) RECIPROCAL DEPOSITS.--The term "reciprocal
deposits" means deposits received by an agent institution through a
deposit placement network with the same maturity (if any) and in the
same aggregate amount as covered deposits placed by the agent
institution in other network member banks.
(F) WELL CAPITALIZED.--The term "well capitalized"
has the meaning given the term in section 38(b)(1).
[Codified to 12 U.S.C. 1828f(i)]
[Section 202(a)[29(i)] of title II of the Act of May 24, 2018
(Pub. No. 115--174; 132 Stat. 1307), effective May 24, 2018]
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