Yesterday, the Federal Deposit Insurance Corporation (FDIC) announced an extension of the comment period for its notice of proposed rulemaking (NPR) aimed at revising the 2020 Brokered Deposit Rule. To ensure that all interested parties have sufficient time to review the proposed changes and prepare their comments, the FDIC has extended the comment period from October 22, 2024, to November 21, 2024.
As we discussed here, on July 30, 2024, the FDIC proposed significant amendments to the 2020 Brokered Deposit Rule. The proposed changes could substantially impact a wide range of bank and nonbank stakeholders who rely on the current rule’s definition of “deposit broker,” related exceptions, and Q&As. The proposed amendments aim to reverse many aspects of the 2020 Rule, which the FDIC believes have led to certain deposit arrangements no longer being classified as brokered, despite presenting similar risks.
The proposed amendments include:
- Amending the definition of “deposit broker;”
- Eliminating the exclusive deposit placement arrangement exception;
- Eliminating the enabling transactions designated business exception;
- Reducing the broker-dealer designated business exception limit from 25% to 10%;
- Updating notice processes to the primary purpose exception and restricting applicants to only insured depository institutions (IDIs); and
- Clarifying the process for an IDI to regain its “agent institution” status.
We highly recommend that both bank and nonbank stakeholders review the NPR and related materials, conduct an internal impact analysis involving key stakeholders, and consider submitting comments. The extension provides an additional month to ensure that all concerns and suggestions are thoroughly addressed.
