Effective date of final Brokered Deposits and Interest Rate Restrictions Rule
The FDIC has issued a final rulerevising its regulations relating to the brokered deposits and interest rate restrictions that apply to less than well capitalized insured depository institutions (IDIs). For brokered deposits, the final rule establishes a new framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating the placement of deposits,” and “primary purpose.” For the interest rate restrictions, the FDIC amended its methodology for calculating the national rate, the national rate cap, and the local market rate cap. Further, the FDIC explained when non-maturity deposits are accepted and when non-maturity deposits are solicited for purposes of applying the brokered deposits and interest rate restrictions.
With respect to brokered deposits, the final rule:
With respect to interest rate restrictions, the final rule:
- Defines the “National Rate” as the average (weighted by market share of domestic deposits) of rates paid by all IDIs and insured credit unions;
- Defines the “National Rate Cap” as the higher of (1) the national rate, plus 75 basis points; or (2) for maturity deposits, 120 percent of the current yield on similar maturity U.S. Treasury obligations and, for non-maturity deposits, the federal funds rate plus 75 basis points; and
- Defines “Local Market Rate Cap” as 90 percent of the highest interest rate paid on a particular deposit product in the IDI’s local market area.
With respect to non-maturity deposits, the final rule:
- Defines when non-maturity deposits are considered solicited or accepted for purposes of the brokered deposits and interest rate restrictions.
The final rule will become effective April 1, 2021; full compliance with the revised brokered deposit regulation is extended to January 1, 2022.
- FDIC FIL-113-2020