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FDIC proposes to modernize brokered deposit regs

The FDIC has issued a notice of proposed rulemaking that would modernize its brokered deposit regulations. The proposal would, among other things, modernize the regulatory framework to remove regulatory disincentives to offering deposit accounts to customers through different channels.

The proposal would—

  • establish a new framework for analyzing whether deposits placed through deposit placement arrangements qualify as brokered deposits. These include arrangements between insured depository institutions (IDIs) and third parties, such as financial technology companies, for a variety of business purposes, including access to deposits, as well as IDIs' increasing reliance on new technologies to engage and interact with their customers.
  • revise the "facilitation" prong of the deposit broker definition so that it applies to any person that engages in specified activities, and provide that a wholly owned operating subsidiary be eligible for the "IDI exception" to the "deposit broker" definition under certain circumstances.
  • amend the "primary purpose" exception to apply when the primary purpose of an agent's or nominee's business relationship with its customers in the placement of funds with IDIs. The availability of the primary purpose exception would be clarified for third parties that place deposits through brokerage sweep accounts, under certain conditions, and to third parties whose primary purpose is enabling customers to make payments, under certain conditions.
  • establish an application process for any third party that wishes to use the primary purpose exception, and would require ongoing reporting.
  • continue to consider an agent's placement of brokered CDs as deposit brokering, and such deposits would continue to be reported as brokered

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

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