In December 2020, the FDIC updated its regulations that implement Section 29 to establish a new framework for analyzing whether certain deposit arrangements qualify as brokered deposits. The new brokered deposit rule establishes bright-line standards for determining whether an entity meets the statutory definition of “deposit broker,” and identifies a number of business relationships, or “designated exceptions” that automatically meet the “primary purpose exception.” The rule requires entities seeking to rely on two of the “designated exceptions” to send a notice to the FDIC, and also establishes an application process for entities that do not meet one of the “designated exceptions but seek a “primary purpose exception.” Entities that submit notices or whose applications are approved will also be subject to certain reporting requirements.
The FDIC also amended its methodology for calculating the national rate as well as the national rate cap and local rate cap for less than well capitalized institutions.
The brokered deposit and interest rate regulations are effective as of April 1, 2021, although an extended compliance date of January 1, 2022 for the brokered deposit regulation is available for institutions that wish to rely on previous staff opinions. After January 1, 2022, full compliance with the regulation is required.
Resources Related to Brokered Deposit and National Rate Regulations
- National Rates and Rate Caps (Applicable to Less Than Well Capitalized Institutions)
- Previous FDIC Staff Interpretations (phased out January 1, 2022)