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The Federal Deposit Insurance Corp. is attempting to clarify its policy regarding brokered deposits after a persistent flood of inquiries from bank and others about what meets the definition.
January 9 -
A new proposal by the FDIC could further discourage the use of noncore deposits, including those facilitated by deposit brokers and listing services and even certain reciprocal instruments not subject to the brokered-fund penalty.
July 17 -
Banks partnering with prepaid card providers face the potential of higher deposit insurance fees and other ramifications from the Federal Deposit Insurance Corp. classifying accounts as "brokered."
January 28
WASHINGTON — The Federal Deposit Insurance Corp. reissued a document on Friday that clarifies when a deposit is considered brokered.
The original document was released in January in the form of frequently asked questions with the intention of aggregating previous opinions and interpretations of brokered deposits.
But many in the industry said the document was actually implementing new guidance, as opposed to collating existing guidelines, because it used simplified language.
A letter from The Clearing House Association, American Bankers Association and the Institute of International Bankers said, "The Associations are concerned that the FAQs may significantly broaden the scope of the types of activities and deposits that are deemed to be 'brokered.' "
Under FDIC deposit insurance rules, banks are assessed higher premiums if they have a high level of brokered deposits.
The revised FAQ issued Friday actually includes two different versions of the same document. In one, bankers can see exactly what the FDIC changed from the January FAQ, similar to a word processor's "track changes" mode, including strike throughs and additional commentary in red ink. The other version presents a clean version of the new FAQ.
The agency also added footnotes throughout the FAQ linking back to previous guidance with the intention of clarifying that the document was a summation of previous interpretations as opposed to new policy. The footnotes should also level the playing field as some institutions might have an advantage over their competitors because they know of an old advisory opinion.
The new FAQ has been revised to clarify areas of particular confusion, including prepaid cards, informal referrals and cases where employees wore multiple hats for an institution.
The FDIC said that it recognizes that brokered deposits are very "fact-specific" and that it "views determinations on a case-by-case basis."
The FAQ document will be updated annually with the next iteration possibly coming as early as next year. In the meantime, the FDIC is seeking feedback on the reworked FAQ.
