On December 18, 2018, the Federal Deposit Insurance Corporation (the "FDIC") published an advance notice of proposed rule-making and request for comments (the "Notice") in connection with a comprehensive review of the regulatory approach to brokered deposits, due to the technological and market developments since the applicable rules were first adopted. The Notice also provides an overview of the current laws and regulations applicable to brokered deposits, a brief history of brokered deposits and the development of the corresponding rules and market data the FDIC has collected. The Notice describes the potential areas for attention that the FDIC has identified, including the:

  • Definition of "brokered deposit" and "deposit broker";
  • Exclusions from the "deposit broker" definition;
  • Treatment of deposit listing services;
  • Classification of accounting software and personal banking apps used to place deposits;
  • Applicability of the primary purpose exception to prepaid cards; and
  • Interest rate restrictions, including the method of calculating rates and the applicability to new products.

While the Notice identifies the above areas for potential clarification or modification, the FDIC does not propose any changes at this time. Instead, the FDIC requests input from the industry on this topic, in particular with respect to the following points:

  • The scope of the current definitions;
  • Unaddressed developments or areas where clarity is required;
  • Any required revisions to the current rules or FDIC materials, including Call Report instructions;
  • Additional market data; and
  • Modifications to the interest rate restrictions, including the calculation methods, treatment of deposits with promotional or special features and treatment of internet-based or e-commerce-based institutions.

The full text of the Notice is available here, and comments may be submitted here. Readers of this publication may be particularly interested in commenting on the scope of the definitions given that for various purposes retail deposits are viewed more favorably than brokered deposits and market-linked certificate of deposit programs generally are administered in a manner consistent with the taking of retail deposits.

Originally published in REVERSEinquiries, Volume 2, Issue 1.

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