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4000 - Advisory Opinions
Applicability of Brokered Deposit Law to National CD Placement
Program
FDIC--95--25
August 21, 1995
Valerie J. Best, Counsel
This is in response to your letter concerning the statutory and
regulatory provisions governing brokered deposits
(12 U.S.C. §§ 1831f,
1831f-1, and 12 C.F.R.
§ 337.6). You write that ABC Bank (the "Bank'') owns and
operates a national CD placement program and corresponding custodial
services as described in more detail in an earlier letter dated June 5,
1992. In connection with your quality improvement efforts, it is the
Bank's intention to create an automated system which would permit
well-capitalized insured depository institutions to enter their
certificate of deposit rates electronically into the Bank's network
files.
It is the Bank's view that brokered deposits gathered through such a
system may be accepted by well-capitalized institutions without limit.
Further, it is the Bank's view that a depository institution that lists
its rates on this system would not thereby be deemed to be a deposit
broker (and therefore required to register as a deposit broker with the
FDIC). You ask us to confirm that both of these conclusions are
correct.
Your understanding is correct. The statutory provisions restricting
the acceptance of funds obtained through a deposit broker do
not apply to well capitalized depository institutions.
Moreover, the interest rate restrictions imposed by the brokered
deposit
{{2-29-96 p.4951}}statute do not apply to well
capitalized depository institutions. Finally, the fact that an
institution enters its rates electronically into the Bank's network
files does not make the entering institution a deposit broker. That is,
institutions entering their rates electronically into the Bank's
network files are not themselves deposit brokers.
Institutions acquiring deposits via the Bank's CD placement program
may be required to report such deposits as brokered deposits in their
call reports or TFRs. Institutions should refer to the instructions
accompanying the call reports and TFRs for guidance.
Please call me at (202) 898-3812 if I can be of further assistance.
I apologize for the delay in responding to your
letter.
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