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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

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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