Section 29 of the Federal Deposit Insurance Act (12 U.S.C. § 1831f) and Section 337.6 of the FDIC’s regulations (12 C.F.R. § 337.6) restrict the acceptance of brokered deposits by FDIC-insured depository institutions (IDIs) that are not well capitalized. All insured depository institutions (including those that are well capitalized) must report brokered deposits in their Consolidated Reports of Condition and Income.
The FDIC has explained the requirements for identifying, accepting, and reporting brokered deposits in published advisory opinions and in the Study on Core Deposits and Brokered Deposits issued in July 2011. Nevertheless, questions continue to arise regarding whether certain types of deposits are considered brokered deposits.
To provide guidance on this subject, the FDIC has issued “Frequently Asked Questions” or “FAQs.” These FAQs (with answers) will be periodically updated on the FDIC’s Web site. The FAQs cover various topics, such as identifying brokered deposits, accepting deposits, listing services, interest rate restrictions, and other brokered deposit-related matters. The guidance on identifying, accepting, and reporting brokered deposits frequently asked questions may be found at https://www.fdic.gov/news/news/financial/2016/fil16042a.pdf.
Subsequent to issuing its guidance, the FDIC has clarified that referrals by business professionals are not expected to cause most banks to change the Call Report treatment of those deposits. While the FAQs describe insurance agents, lawyers and accountants that refer clients to a bank as deposit brokers, informal professional referrals not related to a programmatic arrangement such as written agreement or a fee would not be considered brokered deposits. Banks are not required to track informal referrals for Call Report purposes.
The FDIC has also recognized that a bank may require time for careful review and consultation with FDIC staff to determine a prepaid-card related deposit to be brokered. As a result, characterization of such deposits as brokered may be reflected in first-quarter 2015 Call Reports and could be resubmitted for prior quarters if appropriate under the materiality test.